As of the close of 9th November, the stock price of Advanced Micro Devices Inc. sits at 148.92, falling by -0.83%. This price position is significantly attached to its recent news, which places it as having won a business with Meta, formerly Facebook. While promoting its recent win, it also announced that it would be releasing a new super chip which will become a major user for big names like Nvidia Corp.
Hello and welcome to my platform. In this blog post, we will be looking at Advanced Micro Devices Inc. or AMD and their recent rise in stock value. Remember that at all times, my review of any stock is a personal opinion and should be in no way a determinant for what you must do. Always do your due diligence before buying a stock. Please don’t forget to like, share and subscribe to my platform if you are new. Making these blogs take a lot of time and effort and it’s great for us to see your support.
About AMD
It is a chip-making company with a market cap of 179.837 billion dollars. The billion-dollar company located in the USA has recently seen a rise in price value after winning a contract with Meta. This rise in value was placed as the top gaining stock in The S&P 500 list for Monday 8th November. The company is run with Lisa Su as the CEO. Since her reign in 2014, she has made it a goal to grow the company into a formidable force against competitors in the national and international market.
With that goal, she has been able to successfully increase the company’s market share to what it is today. The success, however, is greatly attributed to the three-year revenue per share growth of 13.6%. This is alongside its three year Ebitda per share growth rate of 71.6%
Its product in the market
In a competitive market like semiconductor microchips, AMD is faced with giants like Marvell Tech, Synopsys, NVIDIA and Intel. However, their struggle for a position has been though they have managed to surpass a big named company like Intel in the industry. The AMD chips are faster. The Ryzen 5000 chips were a big hit, earning them a 25% greater market share. The company is also set to launch its CPU later this year. The CPU is said to have a 3-D V Cache. This chip is predicted to cause a significant market performance change of up to 15%.
Its competition and present stance
AMD has seen a lot of positive growth, and its products have made a significant market change. However, its battle for a place among the best has been shaky. Even after the launch of their Ryzen 5000 chips that made a significant impact on their growth, it didn’t last very long before Intel, its biggest rival, won back the spot with its Alder Lake Series.
Both companies have shown their advantages and weaknesses, and for customers, it is more of a race to get the next best feature to be thrown in by these two competitors. Although there has been a lot of back and forth with AMD, it has shown its ability as an innovative company. And when you compare its research and development budget to other companies, you only wonder how much better they could go if they had more financing.
And to show more of how fearless the company is, they have recently announced their interest to take on the biggest brand in the CPU market, Nvidia. Its latest MI200 chip, an accelerator made to improve machine learning and AI speed, will be a major competitor for Nvidia’s A100 chip. If truly this chip sets itself on the same standard as that of Nvidia, then we can only expect a massive change in the market values. It will undoubtedly place AMD in a far greater position than it presently sits.
One thing is certain; the innovation and persistence in growth for the company are building a niche for them with no limitations and a lot of surprises. This, of course, is what every investor wants.
Partnerships
AMD has made several partnerships, from small partnerships like the Oak Ridge National Laboratory in Tennessee using their new chip in a Frontier supercomputing system to bigger deals. Its biggest win and a major defeat of Intel came on Monday when they won Meta as a data centre chip customer.
With Meta in its new line to join companies like Alphabet, Google, Amazon, and Microsoft, AMD is fast building a list of powerful partners. With this new deal with Meta, AMD will assist in growing the ecosystem of semiconductors in the states.
Company valuation
AMD has shown itself as a market worthy company with growth rates at an impressive margin. In the next few years, many investors and analysts are sure that AMD will have a prominent position among the top ranking in their industry. Within just a few years, they have gone to the stage of a neck to neck battle with Intel, and at this point, they are looking to begin a similar situation with a top company like Nvidia. Beyond this, the company is vastly diversifying into the cloud industry and AI.
These are all very good growth for them as a company. But even with all this, the company still has a price to earnings ratio of 46.88. This is very low when compared to a competitor like Nvidia, which sits at 110.10. Its present trade is also well below its median historical average of 60.96. So if they had not established the newest partnership, AMD would be ranked as an undervalued company. In terms of overall company valuation, its growth rate should offer as much as a 31% in revenue increase in the next few years. This is notably higher than Nvidia’s expected revenue growth of 28%.
With so much to see and expect from AMD, it is, without doubt, a company worth investing in. Its stock should see a significant rise in the next few months and would make a great hold for now. Although presently undervalued, the popularity of its innovation and its very recent challenge towards Nvidia’s product should drive in greater investor interest and an overall greater market cap. Thank you for following us through our review of AMD. You can also check out my previous blog such as “Investing for Beginners – The Stock Market vs Real Estate“. If you enjoyed the post, share, and comment.
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