- Apr 13, 2013
- 3,147
First off, a commentary on today's earnings report from AMD (see above link):
"Shares of Advanced Micro Devices Inc. are skyrocketing Thursday after the semiconductor manufacturer beat the Street's estimates for the first-quarter earnings period after market close on Wednesday. Trading up near 14% at $11.04 on Thursday morning, AMD reflects a 7.5% return year-to-date (YTD), compared to the S&P 500's 0.7% decline amid a period of heightened volatility, which has weighed heavily on high-flying tech stocks and chipmakers.
Analysts applauded better-than-expected Q1 earnings results from AMD, boosted by continued demand from cryptocurrency miners and its new products such as its Ryzen chips. Revenue in the three months ended in March jumped 40% over last year to $1.65 billion, yielding adjusted earnings of $0.11 per share. The Street had been modeling for $1.57 billion in revenue and $0.09 per share in earnings. AMD Chief Executive Officer Lia Su called the results "outstanding," driven by the uptake of its chips for PCs, video gaming and the data center.
Second-quarter revenue guidance also came in significantly above the consensus estimate. In the current quarter, AMD expects revenue of $1.725 billion, give or take $50 million, above the consensus at $1.575 billion.
The Street viewed the blowout quarter as demonstrating signs of accelerated gains against competitors including Intel Corp. Addressing the competition, Su highlighted AMD's opportunity to address the $75 billion high-performance computing space.
"AMD turned in a solid beat and raise to estimates as the company's new Ryzen Desktop CPU, Vega, GPU and Epyc server CPU are gaining traction within their various market," wrote Stifel chip analyst Kevin Cassidy in a note to clients Thursday. He recommends buying AMD on "potential upside to estimated driven by adoption of Epyc server CPUs in 2H18" and expects the stock to gain near 27% over 12 months to reach $14.
Even the Street's AMD bears admitted that the quarter may signal more good times ahead for the chipmaker as it makes a turnaround from a period of selling pressure. "Overall the company is finally beginning to show some product inflection to investors, with gross margins for the first time stepping up decently vs Street expectations," wrote Bernstein's Stacy Rasgon in response to the Q1 results. "For the first time since this product cycle kicked off AMD may have given investors at least some reason to dream."
As for the cryptocurrency space, AMD's CEO indicates that customers who buy its products for crypto mining represented roughly 10% of revenue in Q1, and that while blockchain is important, it's not the company's core focus at the moment. "People are watching the day-to-day of what Bitcoin does—and [they think] that relates to our day to day sales and it doesn't," stated Su, indicating that the decentralized market can be "a bit of a distraction" for investors right now."
CS Comment- One thing of extreme importance that has not been brought up is that Intel has been promising a CPU based on the 10nm process, a process that many have already reported is doomed to fail using current methods of production (due to Electrostatic deposition velocity resulting in sub-optimal yields). But while Intel is chained to their own fabrication facilities chasing a process node that may be unobtainable (like the 20nm node), AMD is fabless and can utilize production facilities of Samsung, Taiwan Semiconductor, and/or Global Foundries that have BYPASSED THE 10nm NODE and are producing chips on a 7nm process- this will be the Ryzen-2 chip, which will be available in the 1st quarter of 2019. This chip will blow anything from Intel out of the water.
If this does indeed occur (and no reason why it should not as Intel are being chumps), AMD will be able to command higher prices- they will no longer be a "budget" chip but instead an Industry leader (along with Qualcomm, which will product 7nm Server chips next year). Essentially AMD will be following Moore's Law and Intel will not.
Finally, Knowledge is power- for any investors out there, Buy the AMD January 2020 12 calls at 2.40, Sell the AMD January 2020 15 calls at 1.40. If AMD rises to $15 you will make $3 for every $1 you invest.
"Shares of Advanced Micro Devices Inc. are skyrocketing Thursday after the semiconductor manufacturer beat the Street's estimates for the first-quarter earnings period after market close on Wednesday. Trading up near 14% at $11.04 on Thursday morning, AMD reflects a 7.5% return year-to-date (YTD), compared to the S&P 500's 0.7% decline amid a period of heightened volatility, which has weighed heavily on high-flying tech stocks and chipmakers.
Analysts applauded better-than-expected Q1 earnings results from AMD, boosted by continued demand from cryptocurrency miners and its new products such as its Ryzen chips. Revenue in the three months ended in March jumped 40% over last year to $1.65 billion, yielding adjusted earnings of $0.11 per share. The Street had been modeling for $1.57 billion in revenue and $0.09 per share in earnings. AMD Chief Executive Officer Lia Su called the results "outstanding," driven by the uptake of its chips for PCs, video gaming and the data center.
Second-quarter revenue guidance also came in significantly above the consensus estimate. In the current quarter, AMD expects revenue of $1.725 billion, give or take $50 million, above the consensus at $1.575 billion.
The Street viewed the blowout quarter as demonstrating signs of accelerated gains against competitors including Intel Corp. Addressing the competition, Su highlighted AMD's opportunity to address the $75 billion high-performance computing space.
"AMD turned in a solid beat and raise to estimates as the company's new Ryzen Desktop CPU, Vega, GPU and Epyc server CPU are gaining traction within their various market," wrote Stifel chip analyst Kevin Cassidy in a note to clients Thursday. He recommends buying AMD on "potential upside to estimated driven by adoption of Epyc server CPUs in 2H18" and expects the stock to gain near 27% over 12 months to reach $14.
Even the Street's AMD bears admitted that the quarter may signal more good times ahead for the chipmaker as it makes a turnaround from a period of selling pressure. "Overall the company is finally beginning to show some product inflection to investors, with gross margins for the first time stepping up decently vs Street expectations," wrote Bernstein's Stacy Rasgon in response to the Q1 results. "For the first time since this product cycle kicked off AMD may have given investors at least some reason to dream."
As for the cryptocurrency space, AMD's CEO indicates that customers who buy its products for crypto mining represented roughly 10% of revenue in Q1, and that while blockchain is important, it's not the company's core focus at the moment. "People are watching the day-to-day of what Bitcoin does—and [they think] that relates to our day to day sales and it doesn't," stated Su, indicating that the decentralized market can be "a bit of a distraction" for investors right now."
CS Comment- One thing of extreme importance that has not been brought up is that Intel has been promising a CPU based on the 10nm process, a process that many have already reported is doomed to fail using current methods of production (due to Electrostatic deposition velocity resulting in sub-optimal yields). But while Intel is chained to their own fabrication facilities chasing a process node that may be unobtainable (like the 20nm node), AMD is fabless and can utilize production facilities of Samsung, Taiwan Semiconductor, and/or Global Foundries that have BYPASSED THE 10nm NODE and are producing chips on a 7nm process- this will be the Ryzen-2 chip, which will be available in the 1st quarter of 2019. This chip will blow anything from Intel out of the water.
If this does indeed occur (and no reason why it should not as Intel are being chumps), AMD will be able to command higher prices- they will no longer be a "budget" chip but instead an Industry leader (along with Qualcomm, which will product 7nm Server chips next year). Essentially AMD will be following Moore's Law and Intel will not.
Finally, Knowledge is power- for any investors out there, Buy the AMD January 2020 12 calls at 2.40, Sell the AMD January 2020 15 calls at 1.40. If AMD rises to $15 you will make $3 for every $1 you invest.
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