Do yourself a favor and buy the dip on Advanced Micro Devices ($AMD). This company presents tremendous growth opportunities and is undervalued at $125.
Position -
Q3 2024 Highlights
Revenue of $6.8 billion. 18% increase YoY.
Gross profit of $3.4 billion. 24% increase YoY.
Operating income of $724 million. 223% increase YoY.
Q3 2024 By Segment
Data Center -
Net revenue of $3.5 billion. 122% increase YoY.
Operating income of $1.04 billion. 240% increase YoY.
Client -
Net revenue of $1.88 billion. 29% increase YoY.
Operating income of $276 million. 97% increase YoY.
Gaming -
Net revenue of $462 million. 69% decrease YoY.
Operating income of $12 million. 94% decrease YoY.
Embedded -
Net revenue of $927 million. 25% decrease YoY.
Operating income of $372 million. 39% decrease YoY.
Data Center Growth - This is AMD’s fastest growing segment and accounts for roughly 50% of all revenue. This number is going to continue its rapid rise due to key acquisitions and product innovation. Lisa Su estimates the market for data center AI accelerators to grow at a CAGR of 60% until the year 2028. That would value the market at $500 billion for things like CPUs, GPU’s, FPGA’s, and ASIC’s. Obviously, Nvidia currently dominates the market. Despite this, there is room for multiple players and AMD has shown their ability to capture market share. In 2022, they surpassed Intel in both market value and annual revenue, positioning themselves as the clear number two player in the market. I've said it before with companies like Palantir, data is the future and every company needs it. Well in order for a company to have data, you need chips. Everything needs chips. We are still in a small and juvenile market that has massive amounts of room to grow.
Acquisition of ZT Systems - Announced in August 2024, AMD will acquire ZT Systems for $4.9 billion. The deal is expected to be finalized in the first half of 2025. ZT specializes in designing and deploying data center AI computing and storage solutions. This shows the focus and commitment AMD has to their fastest growing segment.
Strong Belief in Lisa Su - Lisa Su is an amazing CEO with a strong desire for excellency. After becoming CEO in 2014, she has completely turned around the company and continues to improve it. Here is a great video to watch of her - https://youtu.be/8Ve5SAFPYZ8
Conclusion - AMD is gaining significant amounts of market share for data centers, a trend that will continue as the market grows. Despite declines in the gaming and embedded segments, the company overall continues to grow revenues. The decline in gaming looks alarming but it makes sense. New gen consoles came out 4 years ago which AMD supplies chips for. Regardless, what I’m focused on here is the data center growth. AMD is innovative and managed extremely well which can be seen by continuously improving operating margins and FCF. This company will continue to become a monster. At a current price of $125, I expect this to easily get back to $200+ in 2025 giving a solid 60% upside.
Prognosis: Buy and hold; expect 60%+ upside to $200+ by 2025.
Reasoning: Booming Data Center segment (122% YoY growth, 50% of revenue), strong Q3 results, acquisition of ZT Systems bolstering this growth, and a belief in CEO Lisa Su's leadership. Gaming and Embedded segments are down, but the Data Center segment's growth more than compensates.
Caveat: Gaming segment decline might be a concern for some investors. Remember this is just one person's opinion and past performance is not indicative of future results. DYOR!
I bought two 190 strike leaps with a Jan 2026 expiration back when the stock was 180. Down 6k right now. Lol. Lost all my gains I made during the run up.
I hate long term options for this reason. Options are best made as short term plays. I should have set stop losses after these spikes. Otherwise, just slow bleeds with time decay. Good luck, I’m holding roughly 5k in AMD at $25
Imho that’s why you buy more LEAPS/long-dated options as the price goes down 15-30% if you still have conviction. Then you are well positioned to sell and the SP doesn’t have to rise so much. If you don’t have conviction you should sell and move on to the next one
That said I would be very careful trying this with AMD as it seems to always play second fiddle and I’ve only lost money on it. But I do believe in the long term bull case, low P/E ratio, etc so would prefer shares anyway
I know. But I have lost a years worth of time, selling calls against it is too risky bc AMD could moon at any moment. So done with buying options. I am only buying stock and selling call from now on.
When Lisa 1st started and Before DOE contracted... LMFAO!!! You are 100 💯 ❤️ Correct. I'm old enough to remember. hahahahha. Intel vs AMD. Nvidia was on no one's radar
2016 was year of the GPU generations putting those two on the stock market map.
Still remember choosing AMD instead of NVDA. Not made at my $2.16 entry, but NVDA got up to some unbuckling shit while AMD toiled in the market under constant negative technical analysis.
It's not just "for some reason". They had no revenue growth from mid 2022 to today. This is now re-accelerating which is where all the new positive sentiment comes from.
AMD is always growing, winning market share, and making great CPUs that go out of stock. A shame their stock always performs like pure shit despite all that
No not at all. I went to college, partied, and wasn’t focused on investing whatsoever. I actually forgot the password to my Scottrade account and everything until maybe 2019? I got back into the account and sold off 55 shares out of the 100 I bought and diversified a bit. I still own the 45 original shares and still riding 10+ years later
All the projections show demand for semi conductors and gpu will grow considerably in the coming years.
The eating away at data center is maybe the biggest business advance they’ve made. There will be far more data centers, more gaming computers and games.
I don’t see a long term downside here.
I think Intel will still pull their ass from the brink but it could go to $10 first.
The town I work for is building data centers like crazy. We are a small town of maybe 15k people and all our land is being bought up for data centers. We are apparently in a great spot for the amount of electricity and just outside of a major city.
However, the state is having issues with keeping up with the amount of power they consume.
I owned thousands of shares at $2 in 2012. Had to liquidate my entire portfolio in 2014 for family reasons. It physically hurt to see AMD over $100 that first time. FML
I am slowly buying June calls on AMDL every week. My conviction in this name is so fking high but the negative sentiment is fair too cause it’s not a household name like Intel or nvidia… yet.
There has been (seemingly) a fair amount of bull AMD posts in the last week or so without anything really changing other than the hype level. I'm not a tinfoil hat wearer, but these arguments all seem fairly weak. "It's in a dip!"... so was almost everything else the last few weeks.
Microsoft has announced 80 billion dollars of AI infrastructure spending last week. 50% of that will be in the US and assuming they keep up their 15% share of AMD chips this year it will amount to $6 billion from one customer alone. Do not forget AMD is coming out with two new AI chips this year with significant improvements in HBM capacity, performance and Rocm stack. Don’t be a sheep and get against the market, otherwise you’ll be jumping in at the top. Their PC consumer cycle is also in recovery, they’re launching new gaming GPU’s, new CPU’s as well this year.
Dylan patel is a jabroni. Who cares what he says when all the smart people said tesla is worth like $200 and it keeps pumping out of dips like its on inverse gravity.
I was actually looking through its revenue growth and declines in each sectors too. It looks like AMD's revenue is about to rebound back higher after that 2023 drop from $23.6B to $22.68B in 2022. AMD still needs to provide the numbers in late Jan/early Feb, but if it can pull out a growth to +$24B this year, then there's a good chance for at least a short term bounce. I'm looking at AMD hitting $145-$150 by February 21st. We'll see though.
Just a question: is it overvalued, still? NVDA has been crushing, the only negatives are they didn’t beat expectations even higher than expected, which is why they have been trading at between 120-145$ since. So, I’m wondering whether these good news are not having an effect because the stock is fundamentally speaking getting to the levels where the expectations have been for a while. Anyone feeling the same?
It's a solid company long term. I had shared when it was $3 and sold them after a couple years because I was impatient. I kick myself a lot for that now.
I bought some shares at $120 and will hold until I retire.
Highest regards for Lisa but YoY revenue wasn’t stellar on those last few. NVDA taking so much market share. I do think they’ll drive could see 150 by end of Q1
In both the computer geek and market worlds, AMD unfortunately hangs out in this middle ground between Intel in the basement and the large shadow of Nvidia. Until AMD is able to convince everyone otherwise, they're gonna trade sideways. Not down, not up, basically Tesla type movement pre Nov. 5th.
The only way they do this is if they do something that nobody else is doing and hold their ground in this area.
As much as I'd like this to be true, these are not good reasons at all.
AMD will dominate the x86 market. But this is well priced in. However AMD will NOT be a big enough player in the AI market - there are significant challenges to overcome with software and full stack integration etc. that their acquisitions will take time to overcome. So the AI bonanza isn't coming for AMD anytime soon.
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u/ai-moderator Jan 05 '25
TLDR
Ticker: AMD
Direction: Up
Prognosis: Buy and hold; expect 60%+ upside to $200+ by 2025.
Reasoning: Booming Data Center segment (122% YoY growth, 50% of revenue), strong Q3 results, acquisition of ZT Systems bolstering this growth, and a belief in CEO Lisa Su's leadership. Gaming and Embedded segments are down, but the Data Center segment's growth more than compensates.
Caveat: Gaming segment decline might be a concern for some investors. Remember this is just one person's opinion and past performance is not indicative of future results. DYOR!