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Buy only King Nvidia. Make no mistake

AMD: This Is Not The Next Nvidia

AMD had a strong start to the year with sales of flagship AI GPUs beating expectations and providing optimistic guidance.Despite good performance, AMD faces challenges in competing with Nvidia in the

AMD: This Is Not The Next Nvidia

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":320991219613976,"tweetId":"320991219613976","gmtCreate":1719390890091,"gmtModify":1719390893772,"author":{"id":4171803256903022,"authorId":4171803256903022,"authorIdStr":"4171803256903022","name":"WealthBuilder","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":0,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body><p>Buy only King Nvidia. Make no mistake</p></body></html>","htmlText":"<html><head></head><body><p>Buy only King Nvidia. Make no mistake</p></body></html>","text":"Buy only King Nvidia. Make no mistake","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/320991219613976","repostId":2446849572,"repostType":2,"repost":{"id":"2446849572","pubTimestamp":1719370443,"share":"https://www.laohu8.com/m/news/2446849572?lang=&edition=full","pubTime":"2024-06-26 10:54","market":"nz","language":"en","title":"AMD: This Is Not The Next Nvidia","url":"https://stock-news.laohu8.com/highlight/detail?id=2446849572","media":"seekingalpha","summary":"AMD had a strong start to the year with sales of flagship AI GPUs beating expectations and providing optimistic guidance.Despite good performance, AMD faces challenges in competing with Nvidia in the ","content":"<html><head></head><body><ul style=\"\"><li><p><a href=\"https://laohu8.com/S/AMD\">AMD</a> had a strong start to the year with sales of flagship AI GPUs beating expectations and providing optimistic guidance.</p></li><li><p>Despite good performance, AMD faces challenges in competing with Nvidia in the AI GPU market.</p></li><li><p>AMD&#39;s shares are no longer overvalued, but there are better investment alternatives due to rising competition.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6c5ebcc44def102b51f242e0a9d23f89\" alt=\"JHVEPhoto\" title=\"JHVEPhoto\" tg-width=\"750\" tg-height=\"500\"/><span>JHVEPhoto</span></p><p>Advanced Micro Devices, Inc. had a good start to the year as the sales of its flagship AI GPUs from the MI300X series, which were released a few months ago, helped the company beat expectations and provide relatively optimistic guidance for the rest of the year. However, even though the generative AI revolution is far from over and the demand for AI GPUs is unlikely to decrease anytime soon, the aggressive growth that NVIDIA Corporation (NVDA) currently experiences is not guaranteed for AMD. This is mostly due to the fact that AMD faces several challenges that could prevent the business from properly regaining momentum.</p><h2 id=\"id_1658520339\">Is The Price Now Right?</h2><p>Back in February, I wrote an article about AMD in which I noted that the company is overvalued and despite joining the generative AI revolution by releasing its flagship AI GPUs from the MI300X series, its shares are not an attractive investment. Since that time, AMD&#39;s shares have depreciated by ~10% and underperformed against the broader market.</p><p>The good news though is that despite the weak performance of AMD&#39;s shares, the company itself had a good start to the year. Back in April, the company released its Q1 earnings report which showed that revenues for the quarter increased by 2.2% Y/Y to $5.47 billion and beat the consensus by $20 million. At the same time, the bottom-line performance was also decent as the non-GAAP EPS of $0.62 was above the estimates by $0.01.</p><p>AMD was able to beat the estimates primarily due to the better-than-expected performance of its data center segment which generated $2.3 billion in revenues, up 80% Y/Y. Thanks to the continuous rise of demand for AI GPUs and AMD&#39;s MI300X chips, the company was also able to increase its guidance for the data center GPU revenue from $3.5 billion to $4 billion in 2024. The management also expects the expansion of gross margin this year, which is a major positive sign for AMD after the disappointing performance in FY23 during which it experienced a Y/Y decline in revenues and earnings.</p><p>Considering that AMD earlier this month revealed ambitious plans to release several new AI GPUs, primarily MI325X in late 2024 and MI400 series in 2026, it makes sense to assume that at the very least it will meet its current annual goals and remain a significant player in the GPU market. That&#39;s why it also makes sense to believe that AMD has everything going for it to capture at least 10% of the data center GPU market in the future, as the demand for advanced processors that power the current generative AI revolution and allow companies to run large language models appears to be far from over.</p><p>Considering this, it would be safe to say that AMD&#39;s shares have a shot at regaining their momentum once again in the foreseeable future. To figure out what kind of upside AMD represents at the current price, I made a DCF model that can be seen below.</p><p>The revenue assumptions for FY24 and FY25 closely correlate with the overall consensus, while in FY26 and beyond I expect a gradual stabilization of the growth rate. The EBIT assumptions also closely correlate with the overall expectations in FY24, and I expect EBIT as a percentage of revenue to gradually continue to increase in FY25 and beyond due to the potential acceleration of margins that could be caused by the improvement of the company&#39;s pricing power in the industry. The tax rate in FY24 is in line with the management&#39;s estimates, after which I expect a gradual increase to the standard corporate tax rate in the terminal period.</p><p>The assumptions for the rest of the metrics closely correlate with AMD&#39;s historical performance. The WACC rate in the model is 8%, while the terminal growth rate is 3%. I used the same rates when calculating the fair value of AMD&#39;s competitor Nvidia.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/290b98383befe736b5e197bcaea9c9fd\" tg-width=\"640\" tg-height=\"317\"/></p><p>AMD&#39;s DCF Model (Historical Data: Seeking Alpha, Assumptions: Author)</p><p>This model shows that AMD&#39;s fair value is $166.81 per share, which represents an upside of ~4% from the current market price. This also means that after the latest depreciation of AMD&#39;s shares, they are no longer overvalued like they were in February when my latest article on the company was published.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/053acc2980c3da6fa94d1bed6be832dc\" tg-width=\"640\" tg-height=\"140\"/></p><p>AMD&#39;s DCF Model (Historical Data: Seeking Alpha, Assumptions: Author)</p><h2 id=\"id_3274332678\">There Are Better Alternatives</h2><p>The biggest issue with AMD is that while its growth prospects look promising thanks to the rising demand for AI GPUs, there&#39;s no guarantee that the company will be able to significantly scale its business due to the rising competition. Despite having a good start to the year, AMD has experienced dozens of downward earnings and revenue revisions from the street as there are concerns that its long-term AI expectations currently could be too high.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e3a63368310309ad9e94c315f014efcc\" alt=\"AMD&#39;s Revisions (Seeking Alpha)\" title=\"AMD&#39;s Revisions (Seeking Alpha)\" tg-width=\"640\" tg-height=\"125\"/><span>AMD&#39;s Revisions (Seeking Alpha)</span></p><p>While AMD is likely to meet its goal of generating $4 billion in AI-related revenue this year, it&#39;s almost nothing when compared to Nvidia which generates significantly more in AI-related revenue in a single quarter. What&#39;s more, is that by planning to launch H200 in 2024, Blackwell B200 in 2025, and next-gen platform Rubin in 2026, Nvidia is setting the stage for complete dominance over the data center GPU market, which would be almost impossible for AMD to overcome given its current sales expectations.</p><p>Considering the number of new deals that Nvidia recently signed with major server OEMs, it&#39;s hard to see how AMD would be able to aggressively scale its operations and reach the same aggressive growth rates that Nvidia has been reporting in recent quarters. The relatively weak performance of AMD&#39;s shares since the start of the year in comparison to Nvidia clearly shows that the market currently prefers to invest in the latter, as the long-term AI expectations of the former could indeed be too high.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/9539a70f32a572894a8f4358bc8d3b77\" tg-width=\"640\" tg-height=\"255\"/></p><p>Stock Performance Chart (Seeking Alpha)</p><p>All of this clearly shows that AMD is not the next Nvidia and it&#39;s hard to see how it will become the dominant player in the GPU market anytime soon. Yes, the company will be able to benefit from the rising demand for AI GPUs, but there are no reasons for investors to favor AMD, which trades at a forward P/E of ~46x, over Nvidia, which trades at the exact same multiples but offers much better growth prospects. Add to all of this the fact that Big Tech is also planning to design its own AI processors and it becomes obvious that AMD is not at an inflection point. While it will be able to improve its performance in comparison to the disappointing 2023, the upside for its shares is not that significant given the rising competition.</p><h2 id=\"id_1777425807\">The Bottom Line</h2><p>While it appears that AMD is no longer overvalued, there&#39;s no guarantee that the company will be able to create significant shareholder value anytime soon due to the rising competition. Unlike Nvidia, which has been beating the estimates, raising the guidance, and exceeding the forecasts over and over again in recent quarters, AMD&#39;s performance could be considered decent at best. Yes, it had a good start of the year and is on track to meet its annual guidance, but at the current valuation, there are no major reasons to favor the company over Nvidia or over any other chip designer that trades at lower multiples and offers a better margin of safety.</p><p>That&#39;s why I&#39;m sticking with my HOLD rating, as I don&#39;t expect any major appreciation or depreciation happening with AMD&#39;s shares anytime soon due to everything that has been described in this article.</p></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: This Is Not The Next Nvidia</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; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\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: This Is Not The Next Nvidia\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-26 10:54 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4700909-amd-this-is-not-the-next-nvidia><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>AMD had a strong start to the year with sales of flagship AI GPUs beating expectations and providing optimistic guidance.Despite good performance, AMD faces challenges in competing with Nvidia in the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4700909-amd-this-is-not-the-next-nvidia\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0061474960.USD":"天利环球焦点基金AU Acc","LU2264538146.SGD":"Fullerton Lux Funds - 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Global Disruptive Opportunities A2 Acc SGD-H","LU0308772762.SGD":"Blackrock Global Allocation A2 SGD-H","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","BK4529":"IDC概念"},"source_url":"https://seekingalpha.com/article/4700909-amd-this-is-not-the-next-nvidia","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2446849572","content_text":"AMD had a strong start to the year with sales of flagship AI GPUs beating expectations and providing optimistic guidance.Despite good performance, AMD faces challenges in competing with Nvidia in the AI GPU market.AMD's shares are no longer overvalued, but there are better investment alternatives due to rising competition.JHVEPhotoAdvanced Micro Devices, Inc. had a good start to the year as the sales of its flagship AI GPUs from the MI300X series, which were released a few months ago, helped the company beat expectations and provide relatively optimistic guidance for the rest of the year. However, even though the generative AI revolution is far from over and the demand for AI GPUs is unlikely to decrease anytime soon, the aggressive growth that NVIDIA Corporation (NVDA) currently experiences is not guaranteed for AMD. This is mostly due to the fact that AMD faces several challenges that could prevent the business from properly regaining momentum.Is The Price Now Right?Back in February, I wrote an article about AMD in which I noted that the company is overvalued and despite joining the generative AI revolution by releasing its flagship AI GPUs from the MI300X series, its shares are not an attractive investment. Since that time, AMD's shares have depreciated by ~10% and underperformed against the broader market.The good news though is that despite the weak performance of AMD's shares, the company itself had a good start to the year. Back in April, the company released its Q1 earnings report which showed that revenues for the quarter increased by 2.2% Y/Y to $5.47 billion and beat the consensus by $20 million. At the same time, the bottom-line performance was also decent as the non-GAAP EPS of $0.62 was above the estimates by $0.01.AMD was able to beat the estimates primarily due to the better-than-expected performance of its data center segment which generated $2.3 billion in revenues, up 80% Y/Y. Thanks to the continuous rise of demand for AI GPUs and AMD's MI300X chips, the company was also able to increase its guidance for the data center GPU revenue from $3.5 billion to $4 billion in 2024. The management also expects the expansion of gross margin this year, which is a major positive sign for AMD after the disappointing performance in FY23 during which it experienced a Y/Y decline in revenues and earnings.Considering that AMD earlier this month revealed ambitious plans to release several new AI GPUs, primarily MI325X in late 2024 and MI400 series in 2026, it makes sense to assume that at the very least it will meet its current annual goals and remain a significant player in the GPU market. That's why it also makes sense to believe that AMD has everything going for it to capture at least 10% of the data center GPU market in the future, as the demand for advanced processors that power the current generative AI revolution and allow companies to run large language models appears to be far from over.Considering this, it would be safe to say that AMD's shares have a shot at regaining their momentum once again in the foreseeable future. To figure out what kind of upside AMD represents at the current price, I made a DCF model that can be seen below.The revenue assumptions for FY24 and FY25 closely correlate with the overall consensus, while in FY26 and beyond I expect a gradual stabilization of the growth rate. The EBIT assumptions also closely correlate with the overall expectations in FY24, and I expect EBIT as a percentage of revenue to gradually continue to increase in FY25 and beyond due to the potential acceleration of margins that could be caused by the improvement of the company's pricing power in the industry. The tax rate in FY24 is in line with the management's estimates, after which I expect a gradual increase to the standard corporate tax rate in the terminal period.The assumptions for the rest of the metrics closely correlate with AMD's historical performance. The WACC rate in the model is 8%, while the terminal growth rate is 3%. I used the same rates when calculating the fair value of AMD's competitor Nvidia.AMD's DCF Model (Historical Data: Seeking Alpha, Assumptions: Author)This model shows that AMD's fair value is $166.81 per share, which represents an upside of ~4% from the current market price. This also means that after the latest depreciation of AMD's shares, they are no longer overvalued like they were in February when my latest article on the company was published.AMD's DCF Model (Historical Data: Seeking Alpha, Assumptions: Author)There Are Better AlternativesThe biggest issue with AMD is that while its growth prospects look promising thanks to the rising demand for AI GPUs, there's no guarantee that the company will be able to significantly scale its business due to the rising competition. Despite having a good start to the year, AMD has experienced dozens of downward earnings and revenue revisions from the street as there are concerns that its long-term AI expectations currently could be too high.AMD's Revisions (Seeking Alpha)While AMD is likely to meet its goal of generating $4 billion in AI-related revenue this year, it's almost nothing when compared to Nvidia which generates significantly more in AI-related revenue in a single quarter. What's more, is that by planning to launch H200 in 2024, Blackwell B200 in 2025, and next-gen platform Rubin in 2026, Nvidia is setting the stage for complete dominance over the data center GPU market, which would be almost impossible for AMD to overcome given its current sales expectations.Considering the number of new deals that Nvidia recently signed with major server OEMs, it's hard to see how AMD would be able to aggressively scale its operations and reach the same aggressive growth rates that Nvidia has been reporting in recent quarters. The relatively weak performance of AMD's shares since the start of the year in comparison to Nvidia clearly shows that the market currently prefers to invest in the latter, as the long-term AI expectations of the former could indeed be too high.Stock Performance Chart (Seeking Alpha)All of this clearly shows that AMD is not the next Nvidia and it's hard to see how it will become the dominant player in the GPU market anytime soon. Yes, the company will be able to benefit from the rising demand for AI GPUs, but there are no reasons for investors to favor AMD, which trades at a forward P/E of ~46x, over Nvidia, which trades at the exact same multiples but offers much better growth prospects. Add to all of this the fact that Big Tech is also planning to design its own AI processors and it becomes obvious that AMD is not at an inflection point. While it will be able to improve its performance in comparison to the disappointing 2023, the upside for its shares is not that significant given the rising competition.The Bottom LineWhile it appears that AMD is no longer overvalued, there's no guarantee that the company will be able to create significant shareholder value anytime soon due to the rising competition. Unlike Nvidia, which has been beating the estimates, raising the guidance, and exceeding the forecasts over and over again in recent quarters, AMD's performance could be considered decent at best. Yes, it had a good start of the year and is on track to meet its annual guidance, but at the current valuation, there are no major reasons to favor the company over Nvidia or over any other chip designer that trades at lower multiples and offers a better margin of safety.That's why I'm sticking with my HOLD rating, as I don't expect any major appreciation or depreciation happening with AMD's shares anytime soon due to everything that has been described in this article.","news_type":1},"isVote":1,"tweetType":1,"viewCount":76,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"upFlag":false,"length":31,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}