AMD stock tanked on Thursday after Goldman Sachs analysts said the rally can’t go on forever. They warned about valuation and also stiff competition from Intel and NVIDIA. But speaking of a rally, the bulls are starting to come back in defense of the chip maker.

AMD stock
By Advanced Micro Devices, Inc. (amd.com) [Public domain], via Wikimedia Commons

AMD stock already reflects bullish scenario

Goldman analyst Toshiya Hari initiated coverage of AMD stock with a Sell rating and $11 per share price target on Thursday. He believes that at 15 times his “very bullish” estimate for earnings per share in 2018, AMD stock is just too expensive. He adds that the stock’s current valuation sits 236% higher than the five-year median multiple, and he can’t justify this.

He also feels that all the potential for further fundamental improvement is already priced in and even doubts that the chip maker will be able to meet his 2018 estimates because of competition from NVIDIA and Intel. He does give Advanced Micro Devices CEO Lisa Su credit for improving execution at the company and also fixing its balance sheet and cutting costs.

The analyst predicts that AMD stock will start to underperform after the company’s analyst day in May.

Goldman’s “a buzzkill” on AMD stock: Jim Cramer

It didn’t take long for bulls to strike back at Hari’s ultra-bearish stance on AMD stock.

“Goldman is being a buzzkill here,” CNBC’s Jim Cramer said on Mad Dash earlier today. “They’re taking away the punchbowl.”

He pointed out that the chip maker is still doing well in video games and in the fight against Intel, a much bigger and stronger rival.

Barron’s also argued against Goldman, saying that the scenario the firm describes as “very bullish” doesn’t look unreasonable. The website noted that in February at around $12 per share, it had argued that AMD stock could double before the end of this year. Barron’s feels that the chip maker can achieve the strong market share Hari describes as “very bullish” and also that when it does, investors will probably send its shares even higher, making the current levels not seem overpriced at all.

The website notes that Hari’s base case assumes “very little progress” with only an 11.6% share of the desktop market and 9.4% share of the notebook market. Goldman’s base case also assumes only a 1.1% share of the server market, although AMD is preparing to release its new Naples server chip very soon as it aims to hit Intel right where it hurts. AMD also released its Ryzen chips recently, and they have been met with glowing reviews so far.

AMD stock closed down 6.35% at $13.27 on Thursday after dipping below its 50-day moving average. The shares are still well above their 52-week low of $2.60, however. AMD stock is up by more than 350% for the last 12 months.

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