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).

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Advanced Micro Devices, Inc. (AMD) Stock Guide

Updated at: 1:26 am ET, 12 Jul 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. When is AMD earnings date?
3. What is AMD stock forecast (i.e., prediction)?
4. AMD buy or sell? What is AMD Finny Score?
5. What are the reasons to buy AMD? Why should I buy AMD stock?
6. What are the reasons to sell AMD? Why should I sell AMD stock?
7. 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 $0.43.

2. When is AMD earnings date?

AMD earnings date is July 28, 2020.

Analyst Predictions

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

Based on AMD analyst price targets, AMD stock forecast is $53.37 (for a year from now). That means the average analyst price target for AMD stock is $53.37. The prediction is based on 31 analyst estimates.

The low price target for AMD is $8.00, while the high price target is $70.00.

AMD analyst rating is Hold.

Analysis

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

#{finnyScore:27}Our quantitative analysis shows 3 reasons to buy and 8 reasons to sell AMD, resulting in Finny Score of 27.

5. 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 40.40%, higher than the industry and sector average revenue growth (1.39% and 1.51%, 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 1.98, higher than the average industry (0.33) and sector (0.17) cash to debt ratio. See AMD cash to debt chart.

6. 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 stock price ($55.88) is close to the 52-week high ($58.90). Perhaps now is a good time to sell? See AMD price chart.
  • AMD forward P/E ratio is 35.63, which is high compared to its industry peers’ P/E ratios. See AMD forward P/E ratio chart.
  • AMD Price/Book ratio is 21.01, which is high compared to its industry peers’ P/B ratios. See AMD forward Price/Book ratio chart.
  • AMD Price/Sales ratio is 8.81, which is high compared to its industry peers’ P/S ratios. See AMD forward Price/Sales ratio chart.
  • AMD average analyst price target ($53.37) is below its current price ($55.88). See AMD price target chart.
  • AMD short share of float is 5.60%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See AMD short share of float chart.
  • AMD Enterprise Value/Revenue multiple is 8.50, which is high compared to its industry peers’ Enterprise Value/Revenue multiples. See AMD Enterprise Value/Revenue chart.
  • AMD Enterprise Value/EBITDA multiple is 60.76, which is high compared to its industry peers’ Enterprise Value/EBITDA ratios. See AMD Enterprise Value/EBITDA chart.

Key Stats

7. 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 $84.97
Average Price Target / Upside $53.37 / -37.19%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Semiconductors
Sector Technology
Number of Employees 10,100
Market Cap $63.84B
Forward P/E Ratio 35.63
Price/Book Ratio 8.81
Revenue (TTM) $7.25B
YoY Quarterly Revenue Growth 40.40%
Profit Margin 6.72%

If you liked this analysis, check out Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

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