AMD's growth is driven by the ongoing prospect of AI expansion and consequent capex refresh in the tech industry.
The company's quarter was fine, with growth accelerating to 10% and steady gross margins at 51%.
Cashflow was weak and that needs watching.
The stock may be impacted by Big Money's plans after FOMC, but if NVDA goes up, so will AMD in our view.
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Not Everyone Likes To Be The Big Dog
by Alex King
AMD’s role in life is to be the number two to someone. First to Intel in CPU and now to NVDA in GPU. The company’s hardware products have more than passed muster for some time now, thanks to engineer-turned-CEO Lisa Su (be careful if bean-counter types run heavy-on-the-engineering type companies - Boeing is witness to what can happen in that event). What the company has never developed is the ecosystem that once surrounded Intel in CPU or Nvidia in GPU. Nvidia’s gross margins reflect its strength in software tooling rather than some kind of edge in hardware design. And INTC’s pricing power in CPU reflected its position in the middle of the Wintel Galaxy, when that mattered.
AMD is a good company, well run, and its growth is lifted by the reality and the ongoing prospect of growth driven by AI - specifically the capex refresh running through tech as a result of AI. More AI means more of everything - more silicon processing of all kinds, more memory, more network capacity (Corning (GLW) this week said fiber demand is ramping), more. Just, more. This will hit end devices soon. Your computer, your phone, your headset won’t be able to cope with new stuff; you’ll buy a new one. The creation of demand for product by the technology industry is just as effective as the creation of demand for securities by the securities industry. This is why the Accumulation - Markup - Distribution - Markdown chart is the exact same chart as the Technology Adoption Cycle chart! Check it and be amazed.
For our 🎥 content about using the Wyckoff Cycle to manage closed-ended accounts, click here.
To 📖👀 more about Technology Adoption Life Cycle, click here.
Anyway. The quarter was fine. Not wonderful, not terrible, just fine. The direction of travel of AMD stock in the near term will I believe be more a function of what Big Money’s plans are for the games after FOMC than anything to do with process nodes, large language models, or divisional performance within AMD.
Here’s the numbers, valuation, stock chart and rating.
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