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As a segue, is this a good time to buy AMD stocks?

smolder 7y ago
A lot of people are already betting big on AMD since before the release of zen2 so it may be overpriced. It's anyone's guess, not every investor will agree. Some holding it may just say yes because they want a bubble to sell out of. Look at price to earnings and all that and consider that sentiment is high right now.
username90 7y ago
Their stocks has increased 2000% since 2016, not sure if there is any value left to extract.
amunicio 7y ago
Leaving aside the GPU market, if you believe AMD is going to take and sustain a sizable share of the CPU market in the next 2 years (in particular server, mobile and high-end desktop), then the answer is yes. If Intel manages to keep AMD market share below ~18% in the next couple of years, then probably not. The value of the stock revolves around how much money AMD is able to generate and the biggest variables here are volume of sales and margins on those sales. AMD's variable costs are probably higher than Intel's since they outsource their manufacturing to TSMC, but their fixed costs dwarf Intel's. Intel AMD Market Cap $252B $44B Revenue $19.2B 2B Earnings Q3 $6B $0.12B Keeping aside the fact that AMD's numbers include GPU sales, notice how AMD's earnings to revenue ratio is very small compared to Intel's. Also notice that Intel's market cap is almost 7 times AMD's (again, AMD has a GPU business too). So the key is really, do you believe that AMD will be able to break the ~18% market share (in particular in high margin segments)? My back of the envelope calculations indicate that at around 20% market share AMD should be able to generate earnings close to the billion dollars per quarter, making AMD a buy. If they cannot break and sustain a market share close to that, my answer would be not. Disclaimer: I have AMD shares and I don't plan to buy or sale given current pricing.
- rcxdude 7y ago
  It seems odd to mention that AMD has a GPU business without mentioning intel has a substantial amount of non-CPU businesses (indeed, their PC business, which includes stuff like NICs and similar, makes up less than half their revenue).
  - amunicio 7y ago
    Intel's Client Computing Group – 55% of 2016 revenues Intel's Data Center Group – 29% of 2016 revenues Source: Wikipedia That is 84% of their business.
liuliu 7y ago
We've written about it earlier this year: https://drz.today/2019/why-we-invest-in-silicon-while-our-bet-is-on-the-cloud/ https://drz.today/2019/why-we-invest-in-silicon-while-our-be...
kmlx 7y ago
no. the buy point has passed. but there are 8 stocks in the fabless semiconductor space that have better fundamentals than AMD. for example: IPHI, AVGO, MPWR.

A lot of people are already betting big on AMD since before the release of zen2 so it may be overpriced. It's anyone's guess, not every investor will agree. Some holding it may just say yes because they want a bubble to sell out of. Look at price to earnings and all that and consider that sentiment is high right now.

username90 7y ago

Their stocks has increased 2000% since 2016, not sure if there is any value left to extract.

amunicio 7y ago

Leaving aside the GPU market, if you believe AMD is going to take and sustain a sizable share of the CPU market in the next 2 years (in particular server, mobile and high-end desktop), then the answer is yes. If Intel manages to keep AMD market share below ~18% in the next couple of years, then probably not. The value of the stock revolves around how much money AMD is able to generate and the biggest variables here are volume of sales and margins on those sales. AMD's variable costs are probably higher than Intel's since they outsource their manufacturing to TSMC, but their fixed costs dwarf Intel's. Intel AMD Market Cap $252B $44B Revenue $19.2B 2B Earnings Q3 $6B $0.12B Keeping aside the fact that AMD's numbers include GPU sales, notice how AMD's earnings to revenue ratio is very small compared to Intel's. Also notice that Intel's market cap is almost 7 times AMD's (again, AMD has a GPU business too). So the key is really, do you believe that AMD will be able to break the ~18% market share (in particular in high margin segments)? My back of the envelope calculations indicate that at around 20% market share AMD should be able to generate earnings close to the billion dollars per quarter, making AMD a buy. If they cannot break and sustain a market share close to that, my answer would be not. Disclaimer: I have AMD shares and I don't plan to buy or sale given current pricing.

rcxdude 7y ago
It seems odd to mention that AMD has a GPU business without mentioning intel has a substantial amount of non-CPU businesses (indeed, their PC business, which includes stuff like NICs and similar, makes up less than half their revenue).
- amunicio 7y ago
  Intel's Client Computing Group – 55% of 2016 revenues Intel's Data Center Group – 29% of 2016 revenues Source: Wikipedia That is 84% of their business.

liuliu 7y ago

We've written about it earlier this year: https://drz.today/2019/why-we-invest-in-silicon-while-our-bet-is-on-the-cloud/ https://drz.today/2019/why-we-invest-in-silicon-while-our-be...

kmlx 7y ago

no. the buy point has passed. but there are 8 stocks in the fabless semiconductor space that have better fundamentals than AMD. for example: IPHI, AVGO, MPWR.