Advanced Micro Devices ,amd) Strong PC sales propel the stock to an all-time high at the end of 2021. But with the chipmaker’s shares plunging, some investors may be wondering: Is AMD stock a buy now?
AMD made a stunning turnaround after a languishing 2015, fueled by new products and improving profitability. And AMD stock rocketed over the next six years.
AMD competes intel ,INTC) in the manufacture of central processing units or CPUs for personal computers and servers. it is also rival NVIDIA ,NVDA) in the market for graphics processing units, or GPUs, for PCs, gaming consoles, and data centers.
Founded in May 1969, AMD went public in September 1972. Global Foundries ,gfs,
Chief Executive Lisa Su Making a Difference
The current chief executive, Lisa Su, took over the reins in October 2014. He led the Santa Clara, California-based company into a new era in 2017 with its Ryzen PC processors and Epic server chips.
Under his supervision, AMD surpassed Intel in making CPUs in smaller node sizes, giving its products an edge in speed and performance. AMD is now making chips on the 5-nanometer scale. The width of circuits on chips is measured in nanometers, which is one billionth of a meter.
chip foundry Taiwan Semiconductor Manufacturing ,tsm) produces AMD’s chips.
The positioning has helped AMD take market share from Intel in PCs and servers. Those gains have buoyed AMD stock.
data center acquisition
Su has also overseen several major acquisitions. In February 2022, AMD completed the acquisition of Xilinx in an all-stock deal worth $49 billion. AMD is expanding its presence in the data center market with specialty chips from Xilinx. News of the acquisition sent AMD shares soaring.
Also, in May 2022, AMD completed the $1.9 billion acquisition of distributed computing startup pensando systems, AMD said the deal would enhance its data center capabilities. AMD stock popped 6.6% that day.
Last June, AMD touted its growing opportunities during an analyst day presentation. The company said its total addressable market is now $300 billion, compared to $79 billion at the 2020 analyst day.
AMD predicted improvements in profit margins and free cash flow as well as compound annual sales growth of 20% for the next three to four years.
AMD is taking market share from Intel
In the fourth quarter, AMD took market share from Intel in CPUs for servers and desktop PCs, according to Mercury Research.
AMD’s unit share of the lucrative server CPU market grew to 17.6% in the fourth quarter, up from 10.7% in the year-ago period.
AMD’s share of desktop PC processor sales stood at 18.6% in the December quarter, compared to 16.2% in the same quarter a year ago.
However, AMD’s share of notebook PC processor sales was 16.4% in the fourth quarter, up from 21.6% a year earlier.
Advanced Micro Devices News: New CPUs
On January 4 at the CES 2023 trade show, AMD introduced new processors spanning notebook computers, desktop PCs and artificial intelligence data centers. It previewed the AMD Instinct MI300, the first data center chip to combine CPU and GPU for improved performance and energy efficiency. However, AMD stock fell 3.6% in the first trading session following the news.
On November 10, AMD announced its fourth generation Epyc server processors. AMD said its new server processors deliver up to 2.8 times more performance and use 54% less power than the competition. AMD’s shares jumped on this news.
On August 29, AMD introduced its Ryzen 7000 Series desktop processors, the first 5-nanometer processors for PCs. The new high-end processors are targeted at gamers, content creators and other users who crave high performance. But AMD stock fell 1.8% after the product launch event.
amd fundamental analysis
Late on January 31, AMD reported a mixed fourth quarter. It posted better-than-expected results for the December quarter but gave soft sales guidance for the current quarter, citing a continued weak PC market. AMD stock jumped 12.6% after the report, which highlighted strong data center chip sales.
AMD earned 69 cents per share on adjusted sales of $5.6 billion in the December quarter. Analysts polled by FactSet were expecting AMD earnings of 67 cents per share on sales of $5.51 billion.
On a year-over-year basis, AMD earnings fell 25% while sales rose 16%. The Xilinx acquisition boosted revenue and helped offset declining PC and gaming chip sales.
For the current quarter, AMD predicted sales of $5.3 billion, down 10% year over year. Analysts were looking for $5.5 billion in the first quarter.
The next potential catalyst for AMD stock is the company’s first-quarter report, which is due in late April or early May.
amd stock technical analysis
AMD stock hit a nearly four-decade low of $1.61 per share in July 2015 before starting its epic recovery. It touched a record high of 164.46 in December 2021 before retreating.
AMD stock ended the regular session on March 14 at 87.45. IBD moved from a flat base to a buy point of 89.04 in intraday trading on March 15, according to MarketSmith charts.
AMD stock has an IBD Relative Strength Rating of 84 out of 99. The Relative Strength Rating measures how a stock’s price performance stacks up against all other stocks over the past 52 weeks. The best growth stocks usually have an RS rating of at least 80.
AMD stock carries an IBD composite rating of 95 out of 99. IBD’s composite rating combines five different proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Is AMD Stock a Buy Now?
Yes, AMD stock is technically a buy right now. A 5% buy zone from its breakout runs from 89.04 to 93.49. However, even with market corrections, buying quality stocks can be risky.
Be sure to check out IBD’s Big Picture column for current market direction.
If the breakout fails, the stop-loss sell zone extends from 82.81 to 81.92.
ibd stock checkup The tool ranks AMD at No. 10 among 33 stocks in IBD’s fabless semiconductor industry group. Fabless chipmaker conglomerates ranked third among 197 industry groups tracked by IBD. IBD trading guidelines recommend focusing on top rated stocks in major industry groups.
To find the best stocks to buy or watch, view the IBD stock list as well as leaderboards from IBD, MarketSmith and SwingTrader platforms.
Follow Patrick Seitz on Twitter @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.
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