The Major Catalysts for This
Looking at Q4, AMD earned $570.00 million, a 26.95% increase from the
preceding quarter. Advanced Micro Devices also posted a total of $3.24 billion
in sales, a 15.82% increase since Q3. Advanced Micro Devices earned $449.00
million, and sales totaled $2.80 billion in Q3.
Advanced Micro Devices reported Q4 earnings per share at $0.52/share,
which beat analyst predictions of $0.47/share.
on Capital Employed.....
In Q4, Advanced Micro Devices posted an ROCE of 0.1%.
Return on Capital Employed is an important measurement of efficiency and
a useful tool when comparing companies that operate in the same industry.
For Advanced Micro Devices, the return on capital employed ratio shows
the number of assets can actually help the company achieve higher returns, which
should payoff from long-term financing strategies.
3. Eating Intels’ Market Dominance.....
For several years now, Advanced Micro Devices has eaten away at Intel’s
market dominance in the CPU segment. Intel, however, with a new CEO at the
helm, has been devising its comeback program.
However, Northland analyst Gus Richard calls Intel’s latest move a
“strategic faux pas” that plays right into its CPU rival’s hands.
not believe TSMC will relinquish its manufacturing lead to INTC any time soon
and process technology leadership drives product leadership and GM higher,” said the
analyst. “INTC expansion into the foundry
market will increase AMD as a priority for TSMC and INTC will be persona non
grata. For this reason, we expect AMD's market share momentum to continue.”
AMD’s and Xilinx’ – soon to be part of AMD - leading-edge volume is
produced at TSMC, more wins for them means more business for TSMC.
“This will likely result in AMD getting earlier access to technology and
better capacity allocation, cementing the Company's x86 process technology
leadership for the foreseeable future,” Richard opined.
4. Analysts Positivity.....
As such, Richard reiterated an Outperform (i.e. Buy) rating on AMD shares
along with a $96 price target. The analyst, therefore, anticipates gains of 24%
over the coming months.
Also, AMD has been the subject of a number of recent analyst reports.....
- Rosenblatt Securities raised their price objective on shares of Advanced
Micro Devices from $120.00 to $135.00 and gave the stock a “buy” rating in a
research note on Wednesday, January 27th.
- Wedbush increased their target price on shares of Advanced Micro Devices
from $100.00 to $110.00 and gave the stock an “outperform” rating in a research
report on Tuesday, January 12th.
- Truist increased their target price on shares of Advanced Micro Devices
from $96.00 to $101.00 in a research report on Wednesday, January 27th.
- Finally, Barclays raised their price target on shares of Advanced Micro
Devices from $115.00 to $120.00 and gave the company an “overweight” rating in
a report on Wednesday, January 27th.
Three equities research analysts have rated the stock with a sell
rating, eight have issued a hold rating and twenty-one have assigned a buy
rating to the company’s stock. Advanced Micro Devices currently has an average
rating of “Buy” and an average target price of $90.39.
5. The Pullback Is A Positive.....
One look at the pace of AMD's growth and its outlook for the year tells us
that the recent sell-off in the stock may not be justified. The chipmaker ended
2020 on a high and expects to deliver massive growth once again this year.
The change in a company's future earnings potential, as reflected in
earnings estimate revisions, and the near-term price movement of its stock are
proven to be strongly correlated. The influence of institutional investors has
a partial contribution to this relationship, as these big professionals use
earnings and earnings estimates to calculate the fair value of a company's
AMD is expected to earn $1.93 per share for the fiscal year ending
December 2021, which represents a year-over-year change of 49.6%.
Analysts have been steadily raising their estimates for Advanced Micro. Over
the past three months, the Consensus Estimate for the company has increased
For Advanced Micro, rising earnings estimates and the consequent rating
upgrade fundamentally mean an improvement in the company's underlying business.
And investors' appreciation of this improving business trend should push the
AMD can be expected to raise its game by the time Intel's 7nm chips hit the
market by transitioning to the competing 5nm manufacturing node within the next
couple of years. A smaller processing node will allow AMD to pack more
transistors closer to each other, leading to improved computing performance and
lower power consumption.
Therefore, AMD can remain ahead of Intel once it makes the transition to a
smaller 5nm process node. Chipzilla is unlikely to regain its technology lead
until the launch of its own 5nm process, the timeline for which is unknown
right now. As it turns out, AMD's foundry partner Taiwan Semiconductor
Manufacturing is reportedly working to increase the production capacity of 5nm
chips. That should bode well for AMD, as it is expected to become TSMC's
second-largest customer and enjoy stronger bargaining power.
Additionally, AMD can be expected to keep up the pressure on Intel in the
data center space after the launch of its latest EPYC server processors. AMD
claims that the latest EPYC 7003 processors based on the 7nm process are twice
as fast as Intel's competing chips. Third-party tests conducted by AnandTech
indicate the same.
More importantly, AMD has a solid lineup of clients using the latest EPYC
server processors. They include Amazon, Cisco, Dell Technologies, Alphabet's
Google, Microsoft, Lenovo, and Tencent. So it won't be surprising to see AMD
log big gains in the data center market in both the short and the long run.