MarketWatch First Take: The AMD that investors bet on is finally here

MarketWatch First Take: The AMD that investors bet on is finally here


Advanced Micro Devices Inc. has finally achieved many of its big goals that investors have been banking on over the past few years, as they drove its shares to become the biggest gainer in the S&P500 for two years in a row.

On Tuesday, AMD reported a record fourth quarter, topping $3 billion in revenue for the first time to produce a record for full-year revenue of $9.76 billion, up 45% from the previous year. AMD AMD, +0.62% produced record profit as well, and predicted big gains from these record results in the year ahead.Yet shares sat basically still in after-hours trading — actually down just a bit. And that is where the problem is now for AMD investors: What happens next?

The organization has been enjoying some real success on new chip families dependent on another engineering, yet the greatest expectations were around the organization’s arrangements to return the worker market, which started in 2017 with another Epyc chip. AMD is gaining enormous ground in that huge and quickly developing business sector, and is going to dispatch its third-age worker/server farm chip family, code-named Milan. AMD said deals of chips offered to the server farm were in the high-adolescents level of all out income, however it actually won’t break out those deals.

“We are content with the advancement in the server farm business … 2020 was a solid year for us. We do see a critical development into 2021,” AMD Chief Executive Lisa Su, said on the expert call Tuesday. “I think there are various drivers … most importantly, I believe we’re seeing the cloud business reinforce for us.” She added later that AMD presently has further client connections because of the positive gathering to its items.

AMD’s stock was the greatest entertainer in the S&P 500 SPX, – 0.15% for both 2019 and in 2018, as the organization indicated results.

Income development was 45% in 2020, yet the organization’s estimate of 37% income development for entire year 2021 shows that the law of enormous numbers is beginning to produce results, coming about in more slow gains.

One more issue within reach is that numerous on Wall Street accept that AMD has profited by the stumbles of its greatest opponent, Intel Corp. INTC, – 0.41%. Since Intel’s exceptionally respected new CEO, Pat Gelsinger, is going to assume control, many are turning out to be anxious that a resurgent Intel could ultimately make mincemeat of AMD.

“Intel’s white-knight CEO change has affected the AMD account somewhat lately as the AMD story pivots around them keeping up and developing their serious situation over the long haul, consequently freshly discovered Intel trust has been coming fairly to the detriment of AMD, ” said Stacy Rasgon, a Bernstein Research investigator, in a profit see to customers.

With the stock right now exchanging at around multiple times Wall Street’s present evaluations for 2021, speculators are confronted with a problem over determining the amount more potential gain would they be able to anticipate from AMD going ahead. It’s an extreme call.

Credit: MarketWatch

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