I remember growing up, whenever I’d purchase a PC, I’d be sure to get one with an Intel chip inside; so ingrained was the 4-tone jingle in my mind and so convinced was I that AMD (NASDAQ: AMD) was somehow subpar to the almighty Intel. Today, I’m not so convinced as AMD seems to be miles ahead of all other semiconductor companies in terms of cutting-edge tech and faster chips. Investors also took notice and made AMD the leading stock of the S&P 500 in 2018 and 2019. As the company strives to overtake the throne from Intel, AMD is the one semiconductor stock I’m buying today
A look at AMD’s financials
AMD’s stock price is up over 15% year-to-date (YTD) and over 23% year-over-year (YoY). According to the company’s last quarterly report (Q2 2021), its revenue is up 99%, gross profit increased by 116%, net income surged 260%, and EPS climbed 250%, YoY. To say that these are impressive numbers would be an understatement.
And that’s not all as for the rest of the year AMD expects revenue growth of nearly 60%, which is up from the previous projection of 50%. This tells me that the company is firing on all cylinders. Further proof of this is the announcement of a $4 billion share repurchase program to boost shareholder value.
What I like about AMD
Two things: its innovation and its leadership in the form of CEO Dr. Lisa Su. On the innovation front, the company is on track to release its most efficient and lowest nanometer chip, the 5 nm Zen 4 in Q2 of 2022. This new generation chip will have a 40% performance boost over the current Zen 3 and that’s saying something like the Zen 3 powers a great deal of the fastest supercomputers in the world already.
As for leadership, AMD’s golden age began when Dr. Lisa Su came on board in January 2012 as Senior Vice President. She spearheaded a diversification push and set up relationships with Sony and Microsoft to power their massively popular gaming consoles. In fact, in three years since joining, AMD sales in non-PC markets grew from 10% to 40%. Most recently, Tesla had announced that it was using AMD chips to power the infotainment system in new Model S and Model X cars.
Risks to AMD’s share price
For all the fireworks, there are a few grey skies. One of them is the worldwide microchip shortage. Since AMD’s chip manufacturer TSMC also services other companies, who’s to say that AMD will always have priority? Additionally, TSMC is based in Taiwan, which is in danger of being absorbed by China.
AMD’s growth potential
AMD has yet to overtake Intel’s microchip throne but it’s only a matter of time. Additionally, there is market share to gain in the server realm as well as in GPUs. With Dr. Su’s leadership, I have little doubt that AMD will make said gains.
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Contributing Writer at MyWallSt
David fell in love with the stock market in 2000 after making $30,000 overnight on Techniclone. His favorite stocks today are Netflix, Google, Amazon, and Apple as they are the market leaders in their sectors and are safe long-term investments.