• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

AMD Is About as Hot as It Gets: Here's How to Trade It

I like AMD in terms of valuation and leadership. Can the stock still come in? Of course it can.
By STEPHEN GUILFOYLE
Apr 05, 2022 | 10:35 AM EDT
Stocks quotes in this article: AMD, NVDA, MRVL, INTC, MSFT, SONY

The news on Monday morning was a little surprising. Long-time Sarge fave Advanced Micro Devices (AMD) had agreed to acquire edge computing startup Pensando for about $1.9B... just weeks after closing the $50B deal to acquire Xilinx. It wasn't long before another long-time Sarge fave, AMD CEO Lisa Su herself, was out and about talking up the deal, and her firm.

Lisa Su Live

Su appeared at CNBC, She spoke about "doubling down on the data center" where the firm competes against the likes of Nvidia (NVDA) and Marvell Technology (MRVL) as well as others. She spoke about the hit and miss environment of selling processors for PCs, where the firm has taken share away from Intel (INTC) . Su also spoke on gaming where even though not quite as hot as the data center, growth remains strong. AMD provides GPUs to both Microsoft (MSFT) and Sony (SONY) for their gaming consoles and competes here against the likes of Nvidia as well. On Gaming, Su said, "It's a very strong gaming cycle here this year and into '23 and beyond."

Performance

AMD is expected to report the firm's first quarter financial results in three weeks. Consensus view is currently for EPS of $0.92, with a range spanning from $0.84 to $0.96. Expectations on the revenue generation side are for about $5.6B. The range for top line results spans from $5.5B to $5.67B. Should AMD report precisely on expectations, these numbers would amount to earnings growth of 77% on revenue growth of 62%. This would maintain the pace of earnings growth of 78% and 77% the last two quarters and accelerate sales growth from the 54% and 49% reported for those same two quarters. In short, AMD is and has been about as hot as it gets. Yet, the stock trades at "just" 27 times forward looking earnings, less Marvell's 31 times and Nvidia's 48 times, two firm's growing performance similarly.

Fundamentally, Advanced Micro Devices is in great shape. A net cash balance more than five times total debt, A very healthy current ratio of 2.02, and total assets that run at about two and a half times total liabilities less equity. As of the end of the fourth quarter, AMD had a tangible book value of $5.70 per share, while producing free cash flow of $2.65 per share for that quarter. AMD passes all of the Sarge tests with flying colors.

My Opinion

I may have a bias. That said, I see AMD more likely to take further share from Intel, especially now, after the Xilinx takeover, than market share is likely to go the other way. I think acquisitions like Pensando better prepare the firm to defend itself in the data center (and gaming) in what will be a serious turf war among the more elite processor manufacturers. I like AMD in terms of valuation and leadership. Can the stock still come in? Of course it can. Demand, in my opinion... is going nowhere. Dips in AMD, from my view, are to be used for the purpose of share accumulation.

Readers will see that a descending triangle had been in place (which is bearish) and that the triangle was disrupted as it came to a close in mid-March. Though the shares have again come in, and surrendered all three of our more important moving averages (21 day EMA, 50 day SMA, 200 day SMA), I don't think I run for the hills here.

The stock has found support at an even $100 twice now. That is the serious line that we don't want to see break. This makes for me, with no discernible pattern in place, the 200 day SMA, currently at $117.42, the moving pivot. Readers will note that we have had to make some adjustments.

Advanced Micro Devices 

- Target Price: $146

- Pivot: $117 (200 day SMA)

- Panic: $98 (break of established support)

(AMD, NVDA, MRVL, MSFT is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells these stocks? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Stephen Guilfoyle was Long AMD, NVDA, MRVL, MSFT equity.

TAGS: Investing | Markets | Stocks | Technical Analysis | Trading | Semiconductors & Semiconductor Equipment | Technology

More from Investing

Bearish Bets: 3 Stocks You Should Consider Shorting This Week

Bob Lang
Jul 3, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Let's Shine a Light on Lucid Motors as It Slides Downhill

Brad Ginesin
Jul 2, 2022 1:00 PM EDT

LCID's market cap has been deflated, so is it now a bargain, or can it slip further?

Stop Wishing, Hoping and Praying and Take Control of Your Investing

James "Rev Shark" DePorre
Jul 2, 2022 10:00 AM EDT

The most powerful thing an investor can do is embrace the idea that they don't know what the future holds.

If You've Got Time, These Three Dividend Aristocrats Should Pay Off

Bob Ciura
Jul 2, 2022 7:30 AM EDT

There high-growth dividend stocks will be here over the long haul.

Welcome to Second Semester on Wall Street, Here's How to Make the Grade

Jim Collins
Jul 1, 2022 4:36 PM EDT

Think you can own big tech? You might just get an 'F' for that. Here's what will get you on the other side of this year.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • 07:59 PM EDT PAUL PRICE

    Very Good Quarterly Numbers From Bassett Furniture (BSET)

    Bassett Furniture blew right through analysts es...
  • 04:41 PM EDT PAUL PRICE

    First-Half Results - Putrid; Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 mark...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login