AMD (AMD.US) or rather Advanced Micro Devices is one of the world's largest chipmakers, the stock rose 31.7% last month, according to data provided by S&P Global Market Intelligence. Last month's gains put AMD shares up 64% year-to-date, beating the market's performance.
After another good earnings report for 3Q2021, AMD gave investors plenty of reasons to be optimistic. During this presentation, AMD CEO Lisa Su announced that Meta Platforms (formerly Facebook), has selected AMD's EPYC processors to power its data centers.
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Open account Try demo Download mobile app Download mobile appFacebook (FB.US) is the latest AMD partner to supply EPYC processors to leading cloud service providers, including Alphabet (GOOGC.US) and Microsoft (MSTF.US), as well as the servers behind streaming service Netflix (NFLX.US).
AMD's stock price has brought investors incredible returns over the past few years. Intel (INTC.US), which dominates the processor market, has long been AMD's biggest competitor. The Meta Platforms deal, however, should lead to further growth in AMD's market share, which currently stands at 16%, and is also evidence that AMD will be one of the direct beneficiaries of the Internet's transformation to a virtual space called the Metaverse.
AMD's Q3 2021 earnings report showed a 54% increase in revenue compared to the same quarter last year. Even more significant was the 134% jump in earnings per share that the company managed to achieve primarily through sales of chips like EPYC, Ryzen and Radeon processors.
The other good news for AMD is that Intel seems to be having a bit of a slowdown and it will take time for Intel to catch up, which leaves AMD in competitive growth mode for now.
The company's earnings per share are expected to grow 105.1% this year, which beats the industry average of 43.5% growth.
Cash is the lifeblood of any company and higher cash flow growth is more important and beneficial for growth-oriented companies than for mature companies that have been established for decades. Cash flow growth enables such companies to expand their operations without the need for expensive external funding, i.e. without losing power on the road to growth.
Currently, Advanced Micro's annual cash flow growth rate is 97%, which is significantly higher than other similar companies. Over the past 3-5 years, the annualized cash flow growth rate has been 49.6%, compared to an industry average of 11%.
AMD is a company gaining share in the blue chip industry previously dominated by Intel, with agreements with major companies like Meta Platforms. As a Meta Platforms partner, the company has significant revenue growth prospects in the context of the metaversion process. The blue chip industry has significant growth prospects as the world becomes more digitized.
Source: xStation5
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