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Why I'm BULLISH on this stock (Bought more)

Feb. 29, 2024
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This is the 2nd stock in my portfolio that I'll be sharing with you. It's called AMD.

What is AMD

Today, AMD (Advanced Micro Devices) offers the industrys broadest portfolio of leadership high-performance and adaptive processor technologies, combining CPUs, GPUs, FPGAs, Adaptive SoCs and deep software expertise to enable leadership computing platforms for cloud, edge and end devices.


Big customers include

  • Alphabet
  • Meta
  • AWS
  • Microsoft
  • Many others


 Why Im bullish

  • Margins are growing
  • Demand > Supply

Especially in data centres, the more time people spend on their phones, laptops, ipads & overall the internet, the more data centres need a product like CPUs.

As mentioned in my Tesla note, I love businesses where demand is greater than supply.

Or even just businesses that will have continuous demand.

  • AMD is extremely innovative, especially in recent years
  • Attractive valuation 

AMD is sitting on a PE ratio of 33.

This is a company that analysts expect 30%+ CAGR over the next 5 years.

The share price is down from its ATH of around $160.

  • TAM is growing

The Total Addressable Market is rising every year, as the products which AMD offers, is the backbone of the 4th industrial revolution and will continue to be.

The reason semiconductors are in shortage, is because theres a massive demand.

Its in our phones, cameras, laptops, 3D printers, medical equipment, cars, gaming equipment etc.

Its also used in the data centres where our data is stores.

Its everwhere. 

  • AMD is in the centre of tech innovation.

For example, the Metaverse which Meta is building, is uncertain. Even thiugh the success of Metas metaverse is uncertain, they areapending billions to build it. AMDs EPYC chips are used in this Metaverse of Meta.

So technically, AMD is a safe bet on the metaverse.

  • Amazing CEO

Lisa Su has shown in recent years just how impressive she is. She still remains very ambitious in confident in AMD.

 

Risks:

  • Recession

If a recession happens, it is likely that there might be less demand for AMDs products as spending lowers in various categories.

  • Semiconductors are viewed as cyclical

What happens when the supply of semiconductors catch up to the demand?

Well, well have to wait and see.

  • Competition is hot

The semiconductor industry is massive, with various names operating in different areas. 

(Intel, Nvidia, Qualcomm, Broadcomm )

Intel has shown, that if execution & innovation lacks, the company will feel it.
 

Extra Info

Share price = $85.16

Market Cap = $137 Billion


 AMD Full Year Results 2021

Revenue =$16.4 billion (YoY growth +68%)

Gross Profit = $7.9 Billion (YoY growth +82%)

Gross margin = 48%

Operating income = $3.65 Billion (+166%)

Operating expenses = $4.29 billion (YoY +44%)


 Guidance 2022


For the first quarter of 2022, AMD expects revenue to be approximately $5.0 billion, plus or minus $100 million, an increase of approximately 45 percent year-over-year and approximately 4 percent quarter-over-quarter. The year-over-year increase is expected to be driven by growth across all businesses. The quarter-over-quarter increase is expected to be driven by higher server and client processor revenue.


Full year guidance:

For the full year 2022, AMD expects revenue to be approximately $21.5 billion, an increase of approximately 31 percent over 2021 driven by growth across all businesses.

This is still big growth & expected to continue.


 Highlight announced:

AMD just closed its $35 billion acquisition of Xilinx, a leader in field-programmable gate arrays.

 

Conclusion

I own AMD & I bought more on these levels.

Weighing my personal bullish vs bearish factors, Im convicted.

All businesses carries risk, thats why diversification is key.

 

Over the next few weeks Ill be sharing which JSE and US companies I own. (Exclusively on the FinMeUp app)

Ive previously written why I hold Tesla.
 

Disclaimer: This is not financial advice. This is my opinions & personal research. Always do your own due diligence.


 


 


 


 


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