Upcoming AMD earnings: concerns about crypto-related demand?

2:03 pm ET, 23 Jul 2018

Advanced Micro Devices, Inc. (AMD) is expected to report earnings on July 25 after market close. Shares are trading at 16.69, down -0.45%.

What are AMD earnings expectations?  What news will the market be watching out for?  

AMD reported first-quarter results that exceeded analysts' expectations, recording its third straight quarter of double-digit year-over-year revenue growth. The firm also provided strong guidance that sent shares up 10% during after-hours trading. While the firm has certainly executed well on its streamlined product roadmap, there are some concerns about the magnitude and sustainability of cryptocurrency-related GPU demand.

AMD competes primarily with Intel and Nvidia, but has experienced major market share loss in recent years and now provides more economical solutions to the PC market.  As AMD has fallen behind competitors, it has been forced to shift its strategy from acting as an integrated device manufacturer that designs, manufactures, and sells integrated circuit products to one that simply designs and sells them. This transition occurred in early 2009 when AMD spun off its manufacturing division that is now GlobalFoundries. 

Despite fierce competition, AMD is able to develop differentiated products. Its accelerated processing unit integrates a CPU and GPU onto one piece of silicon. This enhances system performance by allowing the processors to run in parallel and thus more optimally. While Intel now incorporates graphics into its processors, AMD’s Radeon GPU is considered superior. AMD has also benefited from the adoption of its GPUs in cryptocurrency mining, though we view this exposure as relatively volatile.

Advanced Micro Devices, Inc. has a history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Beat analyst EPS estimates by 2 cents ($.02 actuals vs. $0 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 2 cents ($.10 actuals vs. $.08 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 3 cents ($.08 actuals vs. $.05 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 2 cents ($.11 actuals vs. $.09 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 500% year-over-year to $.12, while revenue is expected to grow 41% year-over-year to $1.72 billion.  

Over the last month, Advanced Micro Devices (AMD) returned +2.14%.

Advanced Micro Devices (AMD) forward P/E ratio is 26.24, and it’s high compared to its industry peers’ P/E ratios.

Advanced Micro Devices (AMD) short share of float is 23.6%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

Advanced Micro Devices (AMD) average analyst price target ($14.06) is -15.76% below its current price ($16.69).

For the latest price and information on Advanced Micro Devices, Inc., please visit Finstead and search for "AMD price" or "AMD news".

Intel and Apple: What's Next?

3:13 pm ET, 03 Apr 2018

Intel’s (NASDAQ:INTC) stock price witnessed a big decline yesterday after Bloomberg reported that Apple would not use Intel chips for its Mac computers. As a part of the multi-step transition, Intel processors will be replaced by native Apple components starting 2020.

Apple did not respond to the ‘news’ and Intel denied acknowledging this as well.  Apart from Intel, its rivals such as Qualcomm, Broadcom, and Arms supply Apple with chips and processors. These are used for various purposes such as artificial intelligence and augmented reality — in addition to in-house chips for Macs, Apple Watches, AirPods, and Beats.

If Apple opts for its own chips instead of other manufacturers’, it will eliminate the critical dependency on the new chip models. It could soon stand out from the competition as the only PC and electronics maker utilizing its own processors.

The Kalamata code is in its initial developmental stage. It is a part of the larger strategy that aims at enabling Apple devices (Macs, iPhones, and iPads) to work in a similar and coordinated way.

This step is a major setback for Intel. The partnership between the two companies has caused the revival of Apple’s Macs and it also helped Intel get to a leading position in the electronics marketplace.

Intel's ability to produce powerful processors compared to its competitors through the use of the latest manufacturing technology has cemented its #1 position on the market.

Will the INTC stock price recover?  Per Finstead research, Intel's average analyst price target is $52, which is close to its current price. The upside is very small.

Intel has a fairly low valuation compared to its peers and lags behind its rivals QCOMCHKPTXNAMD, and NVDA.

Investors should consider a couple of points to estimate the impact of Bloomberg’s claim on Intel’s business going forward:

  • Bloomberg indicated that Apple makes up only 5% of Intel’s total revenue 
  • Apple held 7.6% market share for PC units in the most recent quarter, based on Gartner research.

Perhaps you should wait and see at this critical juncture until things fully play out.  

Lam Research (LRCX): Can The Stock Price Run Sustain?

2:18 pm ET, 22 Mar 2018

LRCX is down 3% today, but it witnessed a 19% stock price hike in the past 12 weeks. The wafer fabrication company has succeeded in keeping up the interest of its shareholders since the past year.

Why are investors bullish about LRCX?

The products manufactured by LRCX are viewed as the essentials for the semiconductor industry. 

Semiconductor equipment companies should show double-digit growth year-on-year.

Companies with exposure to memory chip production should benefit from continued growth in memory demand.

In the coming 5 years, LRCX has devised a plan to return 50% of free cash flow to stockholders and raise its quarterly dividend to $1.10 per share (a 120% increase from June 2018).

Besides this, a $2 billion share repurchase program will start in the next 12-18 months.

What do the bears say?

While the semiconductor equipment industry is forecast to grow double-digit in 2018, growth will only be a quarter of the growth exhibited in 2017.

According to Finstead Research, LRCX’s average price target is $246.  There is a 10% upside (go to Finstead.com and type “LRCX upside” to get the latest figures).

The valuation of LRCX is lowest among its peers.

LRCX has a high Short Share of Float compared to the average for the industry, which is an indication of high volatility in the upcoming period.

AMD Risks You Should Be Aware Of

4:47 pm ET, 05 Dec 2017

semiconductors

AMD is a great stock.  But there are a few risks you need understand when it comes to investing in AMD.  

AMD is at a considerable disadvantage compared with Intel in terms of scale. Intel is able to heavily outspend AMD in capital outlays and R&D, leading to further propagation of its market share dominance over AMD. 

The cyclical nature of the semiconductor industry, coupled with AMD’s lack of growth in recent years, make AMD an inherently risky investment. Nvidia and to a lesser extent Intel continue to apply pressure on AMD’s graphics business and there are no guarantees that its APU designs can sustain presence in computing devices. 

AMD has done a solid job with its semi-custom chip design wins, however, to diversify itself from the PC.  Nonetheless, any misstep could lead to the possibility that AMD will be unable to meet its debt obligations, particularly in 2019 when it has $196 million due. Its cash balance, which AMD targets to maintain between $600 million and $1.0 billion, will be heavily scrutinized going forward.

Over the last year, AMD has returned +14.52%. This return is lower than Technology sector (23.50%), Semiconductor - Broad Line Industry (30.61%), and S&P 500 (19.27%) returns.

AMD price target upside is 44.27% based on Finstead research (type "AMD upside" on Finbot).

Advanced Micro Devices, Inc. (AMD) Stock Guide

Updated at: 10:52 am ET, 17 Sep 2020

Before we start: if you're looking for AMD stock price, you can quickly find it out by visiting Finny and typing "AMD quote". If you're looking for a quick scoop on AMD stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "AMD". You'll get all this info in one place. Or you can just type "AMD news" to get the latest stock news.

Looking to buy or sell Advanced Micro Devices, Inc. (AMD)? Interested in getting the full scoop on AMD, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this AMD stock guide, we'll address key questions about AMD, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are AMD earnings?
2. What is AMD stock forecast (i.e., prediction)?
3. AMD buy or sell? What is AMD Finny Score?
4. What are the reasons to buy AMD? Why should I buy AMD stock?
5. What are the reasons to sell AMD? Why should I sell AMD stock?
6. What are AMD key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are AMD earnings?

AMD trailing 12-month earnings per share (EPS) is $0.51.

Analyst Predictions

2. What is AMD stock forecast (i.e., prediction)?

Based on AMD analyst price targets, AMD stock forecast is $77.15 (for a year from now). That means the average analyst price target for AMD stock is $77.15. The prediction is based on 31 analyst estimates.

The low price target for AMD is $9.00, while the high price target is $120.00.

AMD analyst rating is Hold.

Analysis

3. AMD buy or sell? What is AMD Finny Score?

#{finnyScore:43}Our quantitative analysis shows 3 reasons to buy and 4 reasons to sell AMD, resulting in Finny Score of 43.

4. What are the reasons to buy AMD? Why should I buy AMD stock?

Here are the reasons to buy AMD stock:

  • The spin-off of AMD's manufacturing operations means that the firm does not have to make the massive capital outlays needed for in-house chip production capabilities.
  • The shift towards semi-custom processors should mitigate the sting from PC market share loss.
  • In order to diversify its business beyond the slowing, transitioning PC market, AMD started its semi-custom chip business in 2012 and has been performing very well till date. The semi-custom chip business combines both intellectual property (IP) from AMD’s engineers as well as IP from customers to help design the chips for their own needs. Both Microsoft and Sony’s game consoles use an accelerated processing unit (APU) chip that combines AMD’s microprocessor and graphics technologies on the same piece of silicon.
  • Despite its late entry, AMD has attained the position of a major player in the microprocessor and graphics processing markets. The company started small, targeting the low-end segment and gradually built a position for itself. AMD has had a very rough time because of the strength and market position of its two primary competitors Intel and NVIDIA.
  • Given the persistent weakness in the core PC business, AMD like Intel, has started investing in its embedded business. Strength in this segment should continue in the future too as the company scores more wins. Given continued product enhancements and design wins at strategic players in key verticals such as digital signage and medical equipment, we expect the momentum to continue through 2018.
  • AMD entered into a definitive agreement to form a joint venture with Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC) in April 2016. This agreement is part of the company’s efforts to gain share in China, which is the fastest growing regional data center server market. AMD licensed certain of its intellectual property (IP) to the THATIC JV for a total of approximately $293 million in license fees payable over several years contingent upon achievement of certain milestones.
  • AMD quarterly revenue growth was 26.20%, higher than the industry and sector average revenue growth (0.39% and 0.89%, respectively). See AMD revenue growth chart.
  • AMD profitability is improving. The YoY profit margin change was 4.40 percentage points. See AMD profitability chart.
  • AMD cash to debt ratio is 1.99, higher than the average industry (0.33) and sector (0.17) cash to debt ratio. See AMD cash to debt chart.

5. What are the reasons to sell AMD? Why should I sell AMD stock?

Let's look at the reasons to sell AMD stock (i.e., the bear case):

  • Intel remains the dominant player in the processor market and holds long-term advantages over AMD in aspects ranging from R&D and marketing to pricing.
  • AMD's foundry partner, GlobalFoundries, lags Intel and Taiwan Semiconductor Manufacturing in process technology.
  • AMD remains behind Intel in process technology, as AMD has only recently moved to the 14-nanometer process while Intel is transitioning to the 10-nanometer process technology.
  • In the traditional computing market, which still generates a chunk of its revenues, AMD is up against Intel’s strong market position. With Intel systems so well entrenched, there is an obvious preference for system integrators to choose Intel processors over AMD. So far, Intel processors have also afforded superior functionality, enabling it to exercise pricing power.
  • AMD has had relatively greater success in the mobile segment and its current product lineup indicates that this focus will continue. However, competition in the mobile segment is likely to accelerate, with more ARM-based devices coming on the market. Also, Microsoft’s surface devices and Google chromebooks tend to cannibalize on notebooks, which run on Intel chips.
  • AMD faces significant customer concentration. Sony, Microsoft and HP Inc. accounted for approximately 59% of the company’s total revenue 2016. Hence, loss of any one of these customers will massively hurt top-line growth.
  • The balance sheet remains highly leveraged, despite several deleveraging efforts. Some of these efforts include the extension of maturities, which came at the cost of higher interest rates. Given the fact that cash burn continues and initiatives will take some time to yield results, we think this makes the shares risky.
  • AMD forward P/E ratio is 55.87, which is high compared to its industry peers’ P/E ratios. See AMD forward P/E ratio chart.
  • AMD Price/Book ratio is 32.75, which is high compared to its industry peers’ P/B ratios. See AMD forward Price/Book ratio chart.
  • AMD Price/Sales ratio is 14.15, which is high compared to its industry peers’ P/S ratios. See AMD forward Price/Sales ratio chart.
  • AMD Enterprise Value/Revenue multiple is 13.83, which is high compared to its industry peers’ Enterprise Value/Revenue multiples. See AMD Enterprise Value/Revenue chart.

Key Stats

6. What are AMD key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for AMD:

Metrics AMD
Price $77.70
Average Price Target / Upside $77.15 / -0.71%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Semiconductors
Sector Technology
Number of Employees 10,100
Market Cap $108.22B
Forward P/E Ratio 55.87
Price/Book Ratio 14.15
Revenue (TTM) $7.65B
YoY Quarterly Revenue Growth 26.20%
Profit Margin 7.96%

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