AMD: Cheap As Chips, But Not For Long

seekingalpha08-26

Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes ...

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ninjainvest
·08-26
aeeking alpha again?
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Andrewinho
·08-26
Really? Hmm... 🤔🤔🤔
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earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes ...\n\n<a href=\"https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2360032135.SGD","symbol_name":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","start_time":0,"source_url":"https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long","article_id":"2461913590","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2461913590","pubTimestamp":1724643993,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround 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SGD"},"translate_title":"AMD：像芯片一样便宜，但不会持续太久","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMD":1},"content_text":"Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes acquisitions, strong sales of Mi300 and EPYC processors, and the potential to outperform Nvidia.Thomas Barwick/DigitalVision via Getty ImagesThesis SummaryAdvanced Micro Devices, Inc. (NASDAQ:AMD) has performed well over the last year, but it has fallen over 20% since its March peak, despite posting strong Q2 earnings.The company is unloved by the market, and is one of the cheapest AI stocks out there, especially when we compare PEG ratios across the sector.AMD has a clear path forward to gain market share and continue to expand its revenue and margins as the AI market grows.Furthermore, AMD has a very compelling technical setup at these levels.I believe AMD’s price could quickly double from here, perhaps even outperforming Nvidia Corporation (NVDA) in terms of total return going forward.Unloved AI CompanyAMD may not have been able to shine as bright as Nvidia, but it is still benefiting from the rise of AI, and this much can be appreciated in the last quarterly earnings report.Q2 Segment Results (Investor Slides)As we can see, Data Center revenues grew 405% YoY, while the client segment was up 49% YoY. These gains though were somewhat offset by the weaker revenues in the Gaming and Embedded segments.However, we can also see that AMD’s margins have been on the up, which is leading to substantial growth in EPS.Gross Margin (Investor slides)The company is benefitting from the revenues in Data Center, which comes with higher margins.The primary driver is really the faster Data Center business growth. If you look at the Data Center business as a percentage of revenue from 37% in Q4 last year to now close to 50%. That faster expansion really helped us with the gross margin.Source: Earnings Call.Outlook (Investor slides)For the next quarter, AMD expects around $6.7 billion in revenues and a further increase in the Gross Margin to 53.5%.Overall, AMD seems to be keeping up with the general growth in the AI market, and as we will see below, it is making some good moves to expand its presence.Despite this, the market still appears to be quite skeptical of AMD, and this is reflected in the valuation.AMD vs. PeersAs we can see in the graph below, AMD has been the worst performer out of its AI peers.AMD vs Peers performance (Seeking Alpha)While Nvidia is up close to 200%, AMD is up 50% in the last year and has been outperformed by the likes of Broadcom (AVGO), Qualcomm (QCOM) Taiwan Semi (TSM) and Micron (MU).This disparity in performance has made AMD one of the cheapest stocks in the space.AMDAVGOQCOMTSMNVDAMUPEG Non-GAAP (FWD)1,081,941,610,991,28NMEPS Growth Diluted (FWD)15,61%17,22%-3,58%8,37%125,19%4,32%EBITDA Growth (YoY)30,52%5,45%-2,66%8,66%709,11%18,99%Net Income Margin5,82%24,10%23,33%37,85%53,40%-7,20%Click to enlargeAs we can see here, AMD is the cheapest stock in terms of Non-GAAP Forward PEG except for TSM, though that stock also suffers from being a foreign stock.Meanwhile, we can see that AMD has one of the best outlooks in terms of forward EPS growth, except for Nvidia. It also has grown EBITDA by 40% in the last year, outperforming the other AI companies, again, except Nvidia.Now, a big reason for this hefty discount can be attributed to the much lower profitability, which can be seen in the much smaller net income margin AMD has compared to its peers.The company has been investing a lot more in terms of R&D to try to catch up to Nvidia, and while this is expensive right now, it is setting up AMD for a much better future.AMD’s TurnaroundIt’s not the first time AMD has proven the market wrong. It managed to carve itself a space in the CPU market against Intel (INTC), and the company is doing the same today with GPUs and Nvidia.There are at least three clear catalysts that are setting up AMD for a bright future.Firstly, AMD has carried out numerous acquisitions over the last year. It acquired Silo AI a few months back, and more recently it announced the acquisition of ZT systems for $4.9 billion.Wedbush analysts believe AMD was able to buy ZT systems for a good price, and have a $200 target on the stock.“In turn, the relatively attractive deal price may allow AMD to recoup a meaningful portion of its acquisition cost when it sells ZT's assets\"Source: Wedbush Analysts.All in all, AMD is taking the necessary steps towards dethroning Nvidia, and that leads me to the second point.The Mi300 and EPYC processor have already shown a great ramp up in sales, showing that AMD can offer a reasonably priced alternative to Nvidia’s chips.Turning to the segments, data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a strong double-digit percentage increase in EPYC CPU sales.Source: Earnings Call.What’s more, we should also begin to see these sales should also help AMD raise their margins even further as it optimizes the production.Yes. On your second question about the profitability, first our team has done a tremendous job to ramp the product MI300. It is a very complex product. So we ramped it successfully. At the same time, the team also started to implement operational optimization to continue to improve gross margin. So we continue to see the gross margin improvement. Over time, in the longer term, we do believe gross margin will be accretive to corporate average.Source: Earnings Call.Lastly, it’s worth noting that Nvidia’s Blackwell delay will certainly aid AMD in gaining more traction with its customers. AMD’s own aggressive roadmap is putting pressure on NVIDIA, which may have just opened the door to AMD.Technical AnalysisThe technical outlook for AMD looks very compelling at the moment.AMD TA (Trendspider)After rallying to over $200, the stock has formed a very clean ABC pull-back to the 38.25 retracement level. Since then, we have seen it rebound above its key EMAs. Note also that we have seen numerous analyst upgrades over the past month.AMD looks ready to break out of the broadening channel it has been establishing and head up to new highs.TakeawayAll in all, I like the setup in AMD at these levels. I think the valuation is reasonable, the chart looks good, and the company is executing well. I added some shares on the dip and plan to hold for at least a couple of quarters.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":342596462973056,"gmtCreate":1724648212984,"gmtModify":1724648216481,"author":{"id":"3581744193958444","authorId":"3581744193958444","name":"ninjainvest","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"hat":"https://static.tigerbbs.com/646756f1284a5a6480ed02cc4fa7d1d2","crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3581744193958444","idStr":"3581744193958444"},"htmlText":"aeeking alpha again? &nbsp;","listText":"aeeking alpha again? &nbsp;","text":"aeeking alpha again?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/342596462973056","repostId":2461913590,"repostType":2,"repost":{"id":"2461913590","pubTimestamp":1724643993,"share":"https://ttm.financial/m/news/2461913590?lang=&edition=fundamental","pubTime":"2024-08-26 11:46","market":"nz","language":"en","title":"AMD: Cheap As Chips, But Not For Long","url":"https://stock-news.laohu8.com/highlight/detail?id=2461913590","media":"seekingalpha","summary":"Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes ","content":"<html><head></head><body><ul style=\"\"><li>Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.</li><li>Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.</li><li>AMD&#39;s turnaround includes acquisitions, strong sales of Mi300 and EPYC processors, and the potential to outperform Nvidia.</li></ul><img src=\"https://community-static.tradeup.com/news/fc78d049150a7ded42b8501307b72644\" tg-width=\"750\" tg-height=\"500\"/>Thomas Barwick/DigitalVision via Getty Images<h2 id=\"id_2032029603\">Thesis Summary</h2>Advanced Micro Devices, Inc. (NASDAQ:AMD) has performed well over the last year, but it has fallen over 20% since its March peak, despite posting strong Q2 earnings.The company is unloved by the market, and is one of the cheapest AI stocks out there, especially when we compare PEG ratios across the sector.AMD has a clear path forward to gain market share and continue to expand its revenue and margins as the AI market grows.Furthermore, AMD has a very compelling technical setup at these levels.I believe AMD’s price could quickly double from here, perhaps even outperforming Nvidia Corporation (NVDA) in terms of total return going forward.<h2 id=\"id_882595856\">Unloved AI Company</h2>AMD may not have been able to shine as bright as Nvidia, but it is still benefiting from the rise of AI, and this much can be appreciated in the last quarterly earnings report.<img src=\"https://community-static.tradeup.com/news/13ff3a88cd304232c916d45204b845a1\" tg-width=\"1280\" tg-height=\"680\"/>Q2 Segment Results (Investor Slides)As we can see, Data Center revenues grew 405% YoY, while the client segment was up 49% YoY. These gains though were somewhat offset by the weaker revenues in the Gaming and Embedded segments.However, we can also see that AMD’s margins have been on the up, which is leading to substantial growth in EPS.<img src=\"https://community-static.tradeup.com/news/ea7cce12eb20f42e8276725764617617\" tg-width=\"1280\" tg-height=\"674\"/>Gross Margin (Investor slides)The company is benefitting from the revenues in Data Center, which comes with higher margins.<blockquote>The primary driver is really the faster Data Center business growth. If you look at the Data Center business as a percentage of revenue from 37% in Q4 last year to now close to 50%. That faster expansion really helped us with the gross margin.</blockquote>Source: Earnings Call.<img src=\"https://community-static.tradeup.com/news/81e0253e9271ba2cd09ac9b8b6ba28ff\" tg-width=\"1280\" tg-height=\"692\"/>Outlook (Investor slides)For the next quarter, AMD expects around $6.7 billion in revenues and a further increase in the Gross Margin to 53.5%.Overall, AMD seems to be keeping up with the general growth in the AI market, and as we will see below, it is making some good moves to expand its presence.Despite this, the market still appears to be quite skeptical of AMD, and this is reflected in the valuation.<h2 id=\"id_608505555\">AMD vs. Peers</h2>As we can see in the graph below, AMD has been the worst performer out of its AI peers.<img src=\"https://community-static.tradeup.com/news/36f5ec76fa40d23cffde75a482320298\" tg-width=\"1280\" tg-height=\"437\"/>AMD vs Peers performance (Seeking Alpha)While Nvidia is up close to 200%, AMD is up 50% in the last year and has been outperformed by the likes of Broadcom (AVGO), Qualcomm (QCOM) Taiwan Semi (TSM) and Micron (MU).This disparity in performance has made AMD one of the cheapest stocks in the space.<table style=\"border-collapse:collapse;\"><colgroup><col/><col/><col/><col/><col/><col/><col/></colgroup><tbody><tr><td style=\"text-align:left;\"></td><td style=\"text-align:left;\">AMD</td><td style=\"text-align:left;\">AVGO</td><td style=\"text-align:left;\">QCOM</td><td style=\"text-align:left;\">TSM</td><td style=\"text-align:left;\">NVDA</td><td style=\"text-align:left;\">MU</td></tr><tr><td style=\"text-align:left;\">PEG Non-GAAP (FWD)</td><td style=\"text-align:left;\">1,08</td><td style=\"text-align:left;\">1,94</td><td style=\"text-align:left;\">1,61</td><td style=\"text-align:left;\">0,99</td><td style=\"text-align:left;\">1,28</td><td style=\"text-align:left;\">NM</td></tr><tr><td style=\"text-align:left;\">EPS Growth Diluted (FWD)</td><td style=\"text-align:left;\">15,61%</td><td style=\"text-align:left;\">17,22%</td><td style=\"text-align:left;\">-3,58%</td><td style=\"text-align:left;\">8,37%</td><td style=\"text-align:left;\">125,19%</td><td style=\"text-align:left;\">4,32%</td></tr><tr><td style=\"text-align:left;\">EBITDA Growth (YoY)</td><td style=\"text-align:left;\">30,52%</td><td style=\"text-align:left;\">5,45%</td><td style=\"text-align:left;\">-2,66%</td><td style=\"text-align:left;\">8,66%</td><td style=\"text-align:left;\">709,11%</td><td style=\"text-align:left;\">18,99%</td></tr><tr><td style=\"text-align:left;\">Net Income Margin</td><td style=\"text-align:left;\">5,82%</td><td style=\"text-align:left;\">24,10%</td><td style=\"text-align:left;\">23,33%</td><td style=\"text-align:left;\">37,85%</td><td style=\"text-align:left;\">53,40%</td><td style=\"text-align:left;\">-7,20%</td></tr></tbody></table>Click to enlargeAs we can see here, AMD is the cheapest stock in terms of Non-GAAP Forward PEG except for TSM, though that stock also suffers from being a foreign stock.Meanwhile, we can see that AMD has one of the best outlooks in terms of forward EPS growth, except for Nvidia. It also has grown EBITDA by 40% in the last year, outperforming the other AI companies, again, except Nvidia.Now, a big reason for this hefty discount can be attributed to the much lower profitability, which can be seen in the much smaller net income margin AMD has compared to its peers.The company has been investing a lot more in terms of R&amp;D to try to catch up to Nvidia, and while this is expensive right now, it is setting up AMD for a much better future.<h2 id=\"id_1788144372\">AMD’s Turnaround</h2>It’s not the first time AMD has proven the market wrong. It managed to carve itself a space in the CPU market against Intel (INTC), and the company is doing the same today with GPUs and Nvidia.There are at least three clear catalysts that are setting up AMD for a bright future.Firstly, AMD has carried out numerous acquisitions over the last year. It acquired Silo AI a few months back, and more recently it announced the acquisition of ZT systems for $4.9 billion.Wedbush analysts believe AMD was able to buy ZT systems for a good price, and have a $200 target on the stock.<blockquote>“In turn, the relatively attractive deal price may allow AMD to recoup a meaningful portion of its acquisition cost when it sells ZT&#39;s assets&#34;</blockquote>Source: Wedbush Analysts.All in all, AMD is taking the necessary steps towards dethroning Nvidia, and that leads me to the second point.The Mi300 and EPYC processor have already shown a great ramp up in sales, showing that AMD can offer a reasonably priced alternative to Nvidia’s chips.<blockquote>Turning to the segments, data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a strong double-digit percentage increase in EPYC CPU sales.</blockquote>Source: Earnings Call.What’s more, we should also begin to see these sales should also help AMD raise their margins even further as it optimizes the production.<blockquote>Yes. On your second question about the profitability, first our team has done a tremendous job to ramp the product MI300. It is a very complex product. So we ramped it successfully. At the same time, the team also started to implement operational optimization to continue to improve gross margin. So we continue to see the gross margin improvement. Over time, in the longer term, we do believe gross margin will be accretive to corporate average.</blockquote>Source: Earnings Call.Lastly, it’s worth noting that Nvidia’s Blackwell delay will certainly aid AMD in gaining more traction with its customers. AMD’s own aggressive roadmap is putting pressure on NVIDIA, which may have just opened the door to AMD.<h2 id=\"id_510754977\">Technical Analysis</h2>The technical outlook for AMD looks very compelling at the moment.<img src=\"https://community-static.tradeup.com/news/c6672bbe016c01a19edfa4b9091090d3\" tg-width=\"1280\" tg-height=\"583\"/>AMD TA (Trendspider)After rallying to over $200, the stock has formed a very clean ABC pull-back to the 38.25 retracement level. Since then, we have seen it rebound above its key EMAs. Note also that we have seen numerous analyst upgrades over the past month.AMD looks ready to break out of the broadening channel it has been establishing and head up to new highs.<h2 id=\"id_2689392552\">Takeaway</h2>All in all, I like the setup in AMD at these levels. I think the valuation is reasonable, the chart looks good, and the company is executing well. I added some shares on the dip and plan to hold for at least a couple of quarters.Editor&#39;s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.</body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>AMD: Cheap As Chips, But Not For Long</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAMD: Cheap As Chips, But Not For Long\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-26 11:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nAdvanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes ...\n\n<a href=\"https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC","LU0823421333.USD":"BNP PARIBAS DISRUPTIVE TECHNOLOGY \"C\" (USD) ACC","LU0082616367.USD":"摩根大通美国科技A（dist）","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","IE00BZ199S13.USD":"BNY MELLON MOBILITY INNOVATION \"B\" (USD) ACC","LU0823421416.USD":"BNP PARIBAS DISRUPTIVE TECHNOLOGY \"C\" (USD) INC","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0321505439.SGD":"Schroder ISF Global Dividend Maximiser A Acc SGD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00BDRTCR15.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC A","LU2125154935.USD":"ALLSPRING (LUX) WF GLOBAL EQUITY ENHANCED INCOME \"I\" (USD) INC","LU1267930813.SGD":"FRANKLIN TEMPLETON SHARIAH GLOBAL EQUITY \"AS\" (SGD) ACC","LU0488056044.USD":"Allianz Asian Multi Income Plus Cl AM DIS USD","IE00B19Z9Z06.USD":"Legg Mason ClearBridge - US Aggressive Growth A Acc USD","IE00BK4W5L77.USD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (USD) ACC","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0792757196.USD":"TEMPLETON SHARIAH GLOBAL EQUITY FUND \"A\" (USD) ACC","LU0965508806.USD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (USD) INC","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","IE00BMPRXQ63.HKD":"NEUBERGER BERMAN NEXT GENERATION CONNECTIVITY FUND \"A\" (HKDHDG) ACC","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU1951198990.SGD":"Natixis Thematics AI & Robotics Fund H-R/A SGD-H","IE00B7SZLL34.SGD":"Legg Mason ClearBridge - Value A Acc SGD-H","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0069063385.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (USD) ACC","LU0077335932.USD":"FIDELITY AMERICAN GROWTH \"A\" INC","AMD":"美国超微公司","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","IE00B5TLWC47.USD":"BNY MELLON LONG-TERM GLOBAL EQUITY \"B\" (USD) ACC","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","IE0004086264.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"A\" (USD) ACC","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD"},"source_url":"https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2461913590","content_text":"Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes acquisitions, strong sales of Mi300 and EPYC processors, and the potential to outperform Nvidia.Thomas Barwick/DigitalVision via Getty ImagesThesis SummaryAdvanced Micro Devices, Inc. (NASDAQ:AMD) has performed well over the last year, but it has fallen over 20% since its March peak, despite posting strong Q2 earnings.The company is unloved by the market, and is one of the cheapest AI stocks out there, especially when we compare PEG ratios across the sector.AMD has a clear path forward to gain market share and continue to expand its revenue and margins as the AI market grows.Furthermore, AMD has a very compelling technical setup at these levels.I believe AMD’s price could quickly double from here, perhaps even outperforming Nvidia Corporation (NVDA) in terms of total return going forward.Unloved AI CompanyAMD may not have been able to shine as bright as Nvidia, but it is still benefiting from the rise of AI, and this much can be appreciated in the last quarterly earnings report.Q2 Segment Results (Investor Slides)As we can see, Data Center revenues grew 405% YoY, while the client segment was up 49% YoY. These gains though were somewhat offset by the weaker revenues in the Gaming and Embedded segments.However, we can also see that AMD’s margins have been on the up, which is leading to substantial growth in EPS.Gross Margin (Investor slides)The company is benefitting from the revenues in Data Center, which comes with higher margins.The primary driver is really the faster Data Center business growth. If you look at the Data Center business as a percentage of revenue from 37% in Q4 last year to now close to 50%. That faster expansion really helped us with the gross margin.Source: Earnings Call.Outlook (Investor slides)For the next quarter, AMD expects around $6.7 billion in revenues and a further increase in the Gross Margin to 53.5%.Overall, AMD seems to be keeping up with the general growth in the AI market, and as we will see below, it is making some good moves to expand its presence.Despite this, the market still appears to be quite skeptical of AMD, and this is reflected in the valuation.AMD vs. PeersAs we can see in the graph below, AMD has been the worst performer out of its AI peers.AMD vs Peers performance (Seeking Alpha)While Nvidia is up close to 200%, AMD is up 50% in the last year and has been outperformed by the likes of Broadcom (AVGO), Qualcomm (QCOM) Taiwan Semi (TSM) and Micron (MU).This disparity in performance has made AMD one of the cheapest stocks in the space.AMDAVGOQCOMTSMNVDAMUPEG Non-GAAP (FWD)1,081,941,610,991,28NMEPS Growth Diluted (FWD)15,61%17,22%-3,58%8,37%125,19%4,32%EBITDA Growth (YoY)30,52%5,45%-2,66%8,66%709,11%18,99%Net Income Margin5,82%24,10%23,33%37,85%53,40%-7,20%Click to enlargeAs we can see here, AMD is the cheapest stock in terms of Non-GAAP Forward PEG except for TSM, though that stock also suffers from being a foreign stock.Meanwhile, we can see that AMD has one of the best outlooks in terms of forward EPS growth, except for Nvidia. It also has grown EBITDA by 40% in the last year, outperforming the other AI companies, again, except Nvidia.Now, a big reason for this hefty discount can be attributed to the much lower profitability, which can be seen in the much smaller net income margin AMD has compared to its peers.The company has been investing a lot more in terms of R&D to try to catch up to Nvidia, and while this is expensive right now, it is setting up AMD for a much better future.AMD’s TurnaroundIt’s not the first time AMD has proven the market wrong. It managed to carve itself a space in the CPU market against Intel (INTC), and the company is doing the same today with GPUs and Nvidia.There are at least three clear catalysts that are setting up AMD for a bright future.Firstly, AMD has carried out numerous acquisitions over the last year. It acquired Silo AI a few months back, and more recently it announced the acquisition of ZT systems for $4.9 billion.Wedbush analysts believe AMD was able to buy ZT systems for a good price, and have a $200 target on the stock.“In turn, the relatively attractive deal price may allow AMD to recoup a meaningful portion of its acquisition cost when it sells ZT's assets\"Source: Wedbush Analysts.All in all, AMD is taking the necessary steps towards dethroning Nvidia, and that leads me to the second point.The Mi300 and EPYC processor have already shown a great ramp up in sales, showing that AMD can offer a reasonably priced alternative to Nvidia’s chips.Turning to the segments, data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a strong double-digit percentage increase in EPYC CPU sales.Source: Earnings Call.What’s more, we should also begin to see these sales should also help AMD raise their margins even further as it optimizes the production.Yes. On your second question about the profitability, first our team has done a tremendous job to ramp the product MI300. It is a very complex product. So we ramped it successfully. At the same time, the team also started to implement operational optimization to continue to improve gross margin. So we continue to see the gross margin improvement. Over time, in the longer term, we do believe gross margin will be accretive to corporate average.Source: Earnings Call.Lastly, it’s worth noting that Nvidia’s Blackwell delay will certainly aid AMD in gaining more traction with its customers. AMD’s own aggressive roadmap is putting pressure on NVIDIA, which may have just opened the door to AMD.Technical AnalysisThe technical outlook for AMD looks very compelling at the moment.AMD TA (Trendspider)After rallying to over $200, the stock has formed a very clean ABC pull-back to the 38.25 retracement level. Since then, we have seen it rebound above its key EMAs. Note also that we have seen numerous analyst upgrades over the past month.AMD looks ready to break out of the broadening channel it has been establishing and head up to new highs.TakeawayAll in all, I like the setup in AMD at these levels. I think the valuation is reasonable, the chart looks good, and the company is executing well. I added some shares on the dip and plan to hold for at least a couple of quarters.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":342593725559184,"gmtCreate":1724647547404,"gmtModify":1724647551397,"author":{"id":"3581563418944392","authorId":"3581563418944392","name":"Andrewinho","avatar":"https://static.tigerbbs.com/3127e2bc40ab23064a5187a00a63e19b","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3581563418944392","idStr":"3581563418944392"},"htmlText":"Really? Hmm... 🤔🤔🤔","listText":"Really? Hmm... 🤔🤔🤔","text":"Really? Hmm... 🤔🤔🤔","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/342593725559184","repostId":2461913590,"repostType":4,"repost":{"id":"2461913590","pubTimestamp":1724643993,"share":"https://ttm.financial/m/news/2461913590?lang=&edition=fundamental","pubTime":"2024-08-26 11:46","market":"nz","language":"en","title":"AMD: Cheap As Chips, But Not For Long","url":"https://stock-news.laohu8.com/highlight/detail?id=2461913590","media":"seekingalpha","summary":"Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes ","content":"<html><head></head><body><ul style=\"\"><li>Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.</li><li>Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.</li><li>AMD&#39;s turnaround includes acquisitions, strong sales of Mi300 and EPYC processors, and the potential to outperform Nvidia.</li></ul><img src=\"https://community-static.tradeup.com/news/fc78d049150a7ded42b8501307b72644\" tg-width=\"750\" tg-height=\"500\"/>Thomas Barwick/DigitalVision via Getty Images<h2 id=\"id_2032029603\">Thesis Summary</h2>Advanced Micro Devices, Inc. (NASDAQ:AMD) has performed well over the last year, but it has fallen over 20% since its March peak, despite posting strong Q2 earnings.The company is unloved by the market, and is one of the cheapest AI stocks out there, especially when we compare PEG ratios across the sector.AMD has a clear path forward to gain market share and continue to expand its revenue and margins as the AI market grows.Furthermore, AMD has a very compelling technical setup at these levels.I believe AMD’s price could quickly double from here, perhaps even outperforming Nvidia Corporation (NVDA) in terms of total return going forward.<h2 id=\"id_882595856\">Unloved AI Company</h2>AMD may not have been able to shine as bright as Nvidia, but it is still benefiting from the rise of AI, and this much can be appreciated in the last quarterly earnings report.<img src=\"https://community-static.tradeup.com/news/13ff3a88cd304232c916d45204b845a1\" tg-width=\"1280\" tg-height=\"680\"/>Q2 Segment Results (Investor Slides)As we can see, Data Center revenues grew 405% YoY, while the client segment was up 49% YoY. These gains though were somewhat offset by the weaker revenues in the Gaming and Embedded segments.However, we can also see that AMD’s margins have been on the up, which is leading to substantial growth in EPS.<img src=\"https://community-static.tradeup.com/news/ea7cce12eb20f42e8276725764617617\" tg-width=\"1280\" tg-height=\"674\"/>Gross Margin (Investor slides)The company is benefitting from the revenues in Data Center, which comes with higher margins.<blockquote>The primary driver is really the faster Data Center business growth. If you look at the Data Center business as a percentage of revenue from 37% in Q4 last year to now close to 50%. That faster expansion really helped us with the gross margin.</blockquote>Source: Earnings Call.<img src=\"https://community-static.tradeup.com/news/81e0253e9271ba2cd09ac9b8b6ba28ff\" tg-width=\"1280\" tg-height=\"692\"/>Outlook (Investor slides)For the next quarter, AMD expects around $6.7 billion in revenues and a further increase in the Gross Margin to 53.5%.Overall, AMD seems to be keeping up with the general growth in the AI market, and as we will see below, it is making some good moves to expand its presence.Despite this, the market still appears to be quite skeptical of AMD, and this is reflected in the valuation.<h2 id=\"id_608505555\">AMD vs. Peers</h2>As we can see in the graph below, AMD has been the worst performer out of its AI peers.<img src=\"https://community-static.tradeup.com/news/36f5ec76fa40d23cffde75a482320298\" tg-width=\"1280\" tg-height=\"437\"/>AMD vs Peers performance (Seeking Alpha)While Nvidia is up close to 200%, AMD is up 50% in the last year and has been outperformed by the likes of Broadcom (AVGO), Qualcomm (QCOM) Taiwan Semi (TSM) and Micron (MU).This disparity in performance has made AMD one of the cheapest stocks in the space.<table style=\"border-collapse:collapse;\"><colgroup><col/><col/><col/><col/><col/><col/><col/></colgroup><tbody><tr><td style=\"text-align:left;\"></td><td style=\"text-align:left;\">AMD</td><td style=\"text-align:left;\">AVGO</td><td style=\"text-align:left;\">QCOM</td><td style=\"text-align:left;\">TSM</td><td style=\"text-align:left;\">NVDA</td><td style=\"text-align:left;\">MU</td></tr><tr><td style=\"text-align:left;\">PEG Non-GAAP (FWD)</td><td style=\"text-align:left;\">1,08</td><td style=\"text-align:left;\">1,94</td><td style=\"text-align:left;\">1,61</td><td style=\"text-align:left;\">0,99</td><td style=\"text-align:left;\">1,28</td><td style=\"text-align:left;\">NM</td></tr><tr><td style=\"text-align:left;\">EPS Growth Diluted (FWD)</td><td style=\"text-align:left;\">15,61%</td><td style=\"text-align:left;\">17,22%</td><td style=\"text-align:left;\">-3,58%</td><td style=\"text-align:left;\">8,37%</td><td style=\"text-align:left;\">125,19%</td><td style=\"text-align:left;\">4,32%</td></tr><tr><td style=\"text-align:left;\">EBITDA Growth (YoY)</td><td style=\"text-align:left;\">30,52%</td><td style=\"text-align:left;\">5,45%</td><td style=\"text-align:left;\">-2,66%</td><td style=\"text-align:left;\">8,66%</td><td style=\"text-align:left;\">709,11%</td><td style=\"text-align:left;\">18,99%</td></tr><tr><td style=\"text-align:left;\">Net Income Margin</td><td style=\"text-align:left;\">5,82%</td><td style=\"text-align:left;\">24,10%</td><td style=\"text-align:left;\">23,33%</td><td style=\"text-align:left;\">37,85%</td><td style=\"text-align:left;\">53,40%</td><td style=\"text-align:left;\">-7,20%</td></tr></tbody></table>Click to enlargeAs we can see here, AMD is the cheapest stock in terms of Non-GAAP Forward PEG except for TSM, though that stock also suffers from being a foreign stock.Meanwhile, we can see that AMD has one of the best outlooks in terms of forward EPS growth, except for Nvidia. It also has grown EBITDA by 40% in the last year, outperforming the other AI companies, again, except Nvidia.Now, a big reason for this hefty discount can be attributed to the much lower profitability, which can be seen in the much smaller net income margin AMD has compared to its peers.The company has been investing a lot more in terms of R&amp;D to try to catch up to Nvidia, and while this is expensive right now, it is setting up AMD for a much better future.<h2 id=\"id_1788144372\">AMD’s Turnaround</h2>It’s not the first time AMD has proven the market wrong. It managed to carve itself a space in the CPU market against Intel (INTC), and the company is doing the same today with GPUs and Nvidia.There are at least three clear catalysts that are setting up AMD for a bright future.Firstly, AMD has carried out numerous acquisitions over the last year. It acquired Silo AI a few months back, and more recently it announced the acquisition of ZT systems for $4.9 billion.Wedbush analysts believe AMD was able to buy ZT systems for a good price, and have a $200 target on the stock.<blockquote>“In turn, the relatively attractive deal price may allow AMD to recoup a meaningful portion of its acquisition cost when it sells ZT&#39;s assets&#34;</blockquote>Source: Wedbush Analysts.All in all, AMD is taking the necessary steps towards dethroning Nvidia, and that leads me to the second point.The Mi300 and EPYC processor have already shown a great ramp up in sales, showing that AMD can offer a reasonably priced alternative to Nvidia’s chips.<blockquote>Turning to the segments, data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a strong double-digit percentage increase in EPYC CPU sales.</blockquote>Source: Earnings Call.What’s more, we should also begin to see these sales should also help AMD raise their margins even further as it optimizes the production.<blockquote>Yes. On your second question about the profitability, first our team has done a tremendous job to ramp the product MI300. It is a very complex product. So we ramped it successfully. At the same time, the team also started to implement operational optimization to continue to improve gross margin. So we continue to see the gross margin improvement. Over time, in the longer term, we do believe gross margin will be accretive to corporate average.</blockquote>Source: Earnings Call.Lastly, it’s worth noting that Nvidia’s Blackwell delay will certainly aid AMD in gaining more traction with its customers. AMD’s own aggressive roadmap is putting pressure on NVIDIA, which may have just opened the door to AMD.<h2 id=\"id_510754977\">Technical Analysis</h2>The technical outlook for AMD looks very compelling at the moment.<img src=\"https://community-static.tradeup.com/news/c6672bbe016c01a19edfa4b9091090d3\" tg-width=\"1280\" tg-height=\"583\"/>AMD TA (Trendspider)After rallying to over $200, the stock has formed a very clean ABC pull-back to the 38.25 retracement level. Since then, we have seen it rebound above its key EMAs. Note also that we have seen numerous analyst upgrades over the past month.AMD looks ready to break out of the broadening channel it has been establishing and head up to new highs.<h2 id=\"id_2689392552\">Takeaway</h2>All in all, I like the setup in AMD at these levels. I think the valuation is reasonable, the chart looks good, and the company is executing well. I added some shares on the dip and plan to hold for at least a couple of quarters.Editor&#39;s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.</body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>AMD: Cheap As Chips, But Not For Long</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAMD: Cheap As Chips, But Not For Long\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-26 11:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nAdvanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes ...\n\n<a href=\"https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC","LU0823421333.USD":"BNP PARIBAS DISRUPTIVE TECHNOLOGY \"C\" (USD) ACC","LU0082616367.USD":"摩根大通美国科技A（dist）","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","IE00BZ199S13.USD":"BNY MELLON MOBILITY INNOVATION \"B\" (USD) ACC","LU0823421416.USD":"BNP PARIBAS DISRUPTIVE TECHNOLOGY \"C\" (USD) INC","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0321505439.SGD":"Schroder ISF Global Dividend Maximiser A Acc SGD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00BDRTCR15.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC A","LU2125154935.USD":"ALLSPRING (LUX) WF GLOBAL EQUITY ENHANCED INCOME \"I\" (USD) INC","LU1267930813.SGD":"FRANKLIN TEMPLETON SHARIAH GLOBAL EQUITY \"AS\" (SGD) ACC","LU0488056044.USD":"Allianz Asian Multi Income Plus Cl AM DIS USD","IE00B19Z9Z06.USD":"Legg Mason ClearBridge - US Aggressive Growth A Acc USD","IE00BK4W5L77.USD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (USD) ACC","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0792757196.USD":"TEMPLETON SHARIAH GLOBAL EQUITY FUND \"A\" (USD) ACC","LU0965508806.USD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (USD) INC","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","IE00BMPRXQ63.HKD":"NEUBERGER BERMAN NEXT GENERATION CONNECTIVITY FUND \"A\" (HKDHDG) ACC","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU1951198990.SGD":"Natixis Thematics AI & Robotics Fund H-R/A SGD-H","IE00B7SZLL34.SGD":"Legg Mason ClearBridge - Value A Acc SGD-H","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0069063385.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (USD) ACC","LU0077335932.USD":"FIDELITY AMERICAN GROWTH \"A\" INC","AMD":"美国超微公司","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","IE00B5TLWC47.USD":"BNY MELLON LONG-TERM GLOBAL EQUITY \"B\" (USD) ACC","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","IE0004086264.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"A\" (USD) ACC","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD"},"source_url":"https://seekingalpha.com/article/4716733-amd-cheap-as-chips-but-not-for-long","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2461913590","content_text":"Advanced Micro Devices, Inc. has fallen 20% since March peak despite strong Q2 earnings.Unloved by the market, but one of the cheapest AI stocks with a clear path for growth.AMD's turnaround includes acquisitions, strong sales of Mi300 and EPYC processors, and the potential to outperform Nvidia.Thomas Barwick/DigitalVision via Getty ImagesThesis SummaryAdvanced Micro Devices, Inc. (NASDAQ:AMD) has performed well over the last year, but it has fallen over 20% since its March peak, despite posting strong Q2 earnings.The company is unloved by the market, and is one of the cheapest AI stocks out there, especially when we compare PEG ratios across the sector.AMD has a clear path forward to gain market share and continue to expand its revenue and margins as the AI market grows.Furthermore, AMD has a very compelling technical setup at these levels.I believe AMD’s price could quickly double from here, perhaps even outperforming Nvidia Corporation (NVDA) in terms of total return going forward.Unloved AI CompanyAMD may not have been able to shine as bright as Nvidia, but it is still benefiting from the rise of AI, and this much can be appreciated in the last quarterly earnings report.Q2 Segment Results (Investor Slides)As we can see, Data Center revenues grew 405% YoY, while the client segment was up 49% YoY. These gains though were somewhat offset by the weaker revenues in the Gaming and Embedded segments.However, we can also see that AMD’s margins have been on the up, which is leading to substantial growth in EPS.Gross Margin (Investor slides)The company is benefitting from the revenues in Data Center, which comes with higher margins.The primary driver is really the faster Data Center business growth. If you look at the Data Center business as a percentage of revenue from 37% in Q4 last year to now close to 50%. That faster expansion really helped us with the gross margin.Source: Earnings Call.Outlook (Investor slides)For the next quarter, AMD expects around $6.7 billion in revenues and a further increase in the Gross Margin to 53.5%.Overall, AMD seems to be keeping up with the general growth in the AI market, and as we will see below, it is making some good moves to expand its presence.Despite this, the market still appears to be quite skeptical of AMD, and this is reflected in the valuation.AMD vs. PeersAs we can see in the graph below, AMD has been the worst performer out of its AI peers.AMD vs Peers performance (Seeking Alpha)While Nvidia is up close to 200%, AMD is up 50% in the last year and has been outperformed by the likes of Broadcom (AVGO), Qualcomm (QCOM) Taiwan Semi (TSM) and Micron (MU).This disparity in performance has made AMD one of the cheapest stocks in the space.AMDAVGOQCOMTSMNVDAMUPEG Non-GAAP (FWD)1,081,941,610,991,28NMEPS Growth Diluted (FWD)15,61%17,22%-3,58%8,37%125,19%4,32%EBITDA Growth (YoY)30,52%5,45%-2,66%8,66%709,11%18,99%Net Income Margin5,82%24,10%23,33%37,85%53,40%-7,20%Click to enlargeAs we can see here, AMD is the cheapest stock in terms of Non-GAAP Forward PEG except for TSM, though that stock also suffers from being a foreign stock.Meanwhile, we can see that AMD has one of the best outlooks in terms of forward EPS growth, except for Nvidia. It also has grown EBITDA by 40% in the last year, outperforming the other AI companies, again, except Nvidia.Now, a big reason for this hefty discount can be attributed to the much lower profitability, which can be seen in the much smaller net income margin AMD has compared to its peers.The company has been investing a lot more in terms of R&D to try to catch up to Nvidia, and while this is expensive right now, it is setting up AMD for a much better future.AMD’s TurnaroundIt’s not the first time AMD has proven the market wrong. It managed to carve itself a space in the CPU market against Intel (INTC), and the company is doing the same today with GPUs and Nvidia.There are at least three clear catalysts that are setting up AMD for a bright future.Firstly, AMD has carried out numerous acquisitions over the last year. It acquired Silo AI a few months back, and more recently it announced the acquisition of ZT systems for $4.9 billion.Wedbush analysts believe AMD was able to buy ZT systems for a good price, and have a $200 target on the stock.“In turn, the relatively attractive deal price may allow AMD to recoup a meaningful portion of its acquisition cost when it sells ZT's assets\"Source: Wedbush Analysts.All in all, AMD is taking the necessary steps towards dethroning Nvidia, and that leads me to the second point.The Mi300 and EPYC processor have already shown a great ramp up in sales, showing that AMD can offer a reasonably priced alternative to Nvidia’s chips.Turning to the segments, data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a strong double-digit percentage increase in EPYC CPU sales.Source: Earnings Call.What’s more, we should also begin to see these sales should also help AMD raise their margins even further as it optimizes the production.Yes. On your second question about the profitability, first our team has done a tremendous job to ramp the product MI300. It is a very complex product. So we ramped it successfully. At the same time, the team also started to implement operational optimization to continue to improve gross margin. So we continue to see the gross margin improvement. Over time, in the longer term, we do believe gross margin will be accretive to corporate average.Source: Earnings Call.Lastly, it’s worth noting that Nvidia’s Blackwell delay will certainly aid AMD in gaining more traction with its customers. AMD’s own aggressive roadmap is putting pressure on NVIDIA, which may have just opened the door to AMD.Technical AnalysisThe technical outlook for AMD looks very compelling at the moment.AMD TA (Trendspider)After rallying to over $200, the stock has formed a very clean ABC pull-back to the 38.25 retracement level. Since then, we have seen it rebound above its key EMAs. Note also that we have seen numerous analyst upgrades over the past month.AMD looks ready to break out of the broadening channel it has been establishing and head up to new highs.TakeawayAll in all, I like the setup in AMD at these levels. I think the valuation is reasonable, the chart looks good, and the company is executing well. I added some shares on the dip and plan to hold for at least a couple of quarters.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":11,"commentSize":2,"repostSize":1,"favoriteSize":3,"likeStatus":false,"favoriteStatus":false}}