The tech selloff may have eased, but Advanced Micro Devices (NASDAQ:AMD) shares are still struggling. Down nearly 50% since the start of the selloff last November, AMD stock just recently hit a new 52-week low. With all the uncertainty out there about the economy, this may continue in the immediate term.

Yet, is this a reason to completely pass up on the chipmaker? Not so fast. The pandemic-era boom times may be in the rearview mirror. The coming year or two could be a more challenging economic environment. Nevertheless, this company may have a path to continue delivering elevated levels of revenue and earnings growth.

If this proves to be the case, shares could make a big recovery in time. Ahead of this possibly happening, now may be the time to take a closer look. It is likely that it will not stay out of favor forever.

AMD Stock: Why its Plunge May Be an Overreaction

In the case of many growth and tech stocks that have plunged in recent months, the plunge has been justified. In the case of Advanced Micro Devices, however, this may have been an overreaction.

Although its growth is set to slow down compared to the levels of growth reported in 2020 and 2021, and even as a recession looks increasingly likely, growth may not be set to come to a screeching halt. At least, that’s the takeaway from the company’s recent investor day, held on Jun. 9. At this event, management made the case as to why, despite a likely economic slowdown, it could continue to report 20% annual revenue growth.

This is thanks to its exposure to end markets where high demand for its CPUs and GPUs could continue, recession or no recession. For example, end user markets, like artificial intelligence (AI), cloud computing, and data centers, could outweigh a possible slowdown in demand among its other main end user markets, like PCs and video gaming.

Granted, we won’t know for certain whether it can deliver on this promise of 20% growth, no matter how challenging economic conditions become. Yet, its current valuation may more than account for this.

Growth Potential at a More Than Reasonable Price

At today’s prices, AMD stock trades for around 18.6x estimated 2022 earnings. That’s a very low valuation for a company that may have the ability to sustain double-digit growth in the coming years. Today’s valuation assumes a far greater level of growth deceleration.

This points to two things. First, if growth comes in-line with current expectations, the current valuation of Advanced Micro Devices may be sustainable. The stock could continue to rise in price over time, just at more of a slow-and-steady pace, in line with moderate earnings growth.

But if management’s bullish forecast pans out, price appreciation from here could be spectacular. Not only could higher-than-expected earnings result in a much larger move for AMD, it could also help justify a re-expansion of its valuation. Even just an expansion of its forward multiple to 25x could mean a tremendous jump in price compared to current prices.

Better yet, the three end markets I discussed above aren’t the only potential growth drivers out there. As I discussed earlier this month, the rise of the metaverse could also be a major long-term catalyst for the stock. It could see tremendous benefit if the metaverse reaches critical mass.

The Verdict on AMD Stock

Currently, AMD stock earns a “B” rating in my Portfolio Grader. This stock could continue to deliver middling performance in the near term. Yet, over a longer timeframe, as uncertainties clear up and if it keeps on delivering outsized growth, the results will speak for themselves.

Maintaining 20% growth could enable this stock to stage a comeback. This is due to shares moving higher in line with earnings, along with a renewed expansion of its earnings multiple. Throw in growth potential from the metaverse and the stock may have a clear path to re-hit its all-time high — and even hit new all-time highs — in the years ahead.

Already priced as if it’s set to experience far lower rates of growth, the market’s short-sighted sentiment works to your advantage. Before the market realizes it has overreacted, you may want to consider buying AMD stock.

On the date of publication, Louis Navellier had a long position in AMD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.