Advanced Micro Devices

jayc
2022-07-03

$AMD(AMD)$A $50,000 investment in shares of AMD at the beginning of 2012 was worth more than $1.3 million at the end of 2021. Of course, the stock has pulled back 42% so far in 2022, but investors who bought the company's shares a decade ago are still sitting on fat gains.

The good part is that AMD's slide this year has made the stock attractive as far as its valuation is concerned. The stock's price-to-earnings (P/E) ratio of 31 is way lower than its five-year average earnings multiple of 105. The forward P/E of 20 points toward healthy growth in AMD's bottom line over the next year.

More importantly, a closer look at the markets that AMD serves tells us that this company could grow at an impressive pace for years to come. Take the data center business, for example, which currently produces around 20% of AMD's total revenue. The chipmaker has been enjoying terrific traction in this market, as AMD's data center revenue doubled year over year in the first quarter of 2022.

It wouldn't be surprising to see the data center business move the needle in a bigger way for AMD. That's because the company sells data center CPUs (central processing units), GPUs (graphics processing units), data processing units (DPUs), and field-programmable gate arrays (FPGAs).

As a result, AMD now has a complete portfolio of chips to target the fast-growing market for data center accelerators, which is expected to clock an annual growth rate of 32.5% through 2031 as per a third-party estimate. Throw in AMD's solid prospects in the video gaming space, where demand for chips that power gaming PCs and consoles is set to expand, and it is easy to see why analysts are expecting its earnings to grow at almost 33% a year for the next five years -- a growth rate that it could sustain for a longer period.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Mr Mooney
    2022-07-04
    Mr Mooney
    stock is cheap now
  • Humbly
    2022-07-04
    Humbly
    The competition is fierce out there with Intel trying to fight back by getting support from the US government.
  • SG 88
    2022-07-04
    SG 88
    thanks for the deep research [Cool]
  • Kiwi1978
    2022-07-04
    Kiwi1978
    Great article. AMD so much more to offer than Intel which the tie up with xilinx.
  • daz888888888
    2022-07-04
    daz888888888
    Week to date, shares of Advanced Micro Devices (AMD -3.66%) are down 16.5%. AMD largely affected by macroeconomic factors especially affecting Tech Stocks in general. Look to more selling and rocky H2
  • tx34
    2022-07-04
    tx34
    Better choice than nvidia?
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