Growth Stocks: Advanced Micro Devices (AMD)

3:13 PM April 13, 2021

AMD leads the gaming market and enters the business sector

For a few years now, AMD has established itself as the leader in the microprocessor sector, having taken risks and innovated with its Ryzen series. Advanced Micro Devices Inc. (AMD), known as AMD, is a global semiconductor company that provides central processing units (CPUs), graphics processing units (GPUs), chipsets, and similar computer products. The company's products are used on a variety of computing platforms, including business, desktop, and portable applications, as well as for graphics processing, server processors, and more. AMD products also play an important role in blockchain applications, so fashionable that even Coinbase will go public on April 14.

Currently, AMD is only in direct competition with Intel Corporation and NVIDIA Corporation. Other companies of information technology and the technology sector that we could consider competitors is IBM but this in question, is light years behind AMD.

We have seen how in recent quarters the segment that has grown the most in sales where developed within the business sector, integrated and semi-customized components, which has experienced solid growth in the last two quarters thanks to the consolidation in some business sectors of teleworking.

In addition, rumors of a merger with Xilinx Inc. for 35,000 million dollars, another American technology company that is dedicated to the distribution and development of products for artificial intelligence and programming, could create a technology giant that, perhaps, could be a major provider in the automotive and autonomous driving sector, beyond a heavy weight such as servers and cloud storage. The operation could receive the "go-ahead" by the end of 2021.

Although in 2019 it showed a decline in sales, it should be noted that profits have been maintained with constant and high growth. The pandemic situation due to coronavirus has played in its favor and as we can see in the table below, sales growth during 2020 has reached historical percentages. while in earnings per share we can see a more sustained growth. Even if we took the values ​​before 2018, the average would be even higher.

Source: AMD FY2020 interim report

Regarding income and operating profit, we see that more than 60% in both cases correspond to the computing and graphics sector, while almost the remaining 40% in both cases corresponds to the business sector, integrated and semi-customized components.

Source: AMD FY2020 interim report

The computing and graphics segment showed a figure of 1960 million dollars in the fourth fiscal quarter of 2020 and in both cases quarterly revenue and operating income grew 18% and 16.7% year-on-year respectively.

The business segment, integrated and semi-custom components had a turnover of $ 1280 million in the same period and this is where the company soared both sales and operating income increased 176% and 440% year-on-year respectively.

Technical situation of the action

AMD interval D1. Source: xStation5

As we can see in the graph, during the impact of the Coronavirus pandemic, AMD's share price was trading in line with the resistance of what was the company's previous all-time high, reached during 2020. After a Rapid recovery, the stock reached new all-time highs at $ 99.22 per share to fall back to the longer-term trend line, its 200-session average. However, since a semiconductor shortage crisis began that affects virtually all sectors, AMD has entered a lateral range in anticipation of a positive catalyst that sets new all-time highs.

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