Should You Invest In This Microprocessor Designer : Advanced Micro Devices, Inc. (NASDAQ: AMD)
Advanced Micro Devices designs microprocessors for the computer and consumer electronics industries. Most of the firm’s sales are in the personal computer and data center markets via CPUs and GPUs. Additionally, the firm supplies the chips found in prominent game consoles such as the Sony PlayStation and Microsoft Xbox.
AMD acquired graphics processor and chipset maker ATI in 2006 to improve its positioning in the PC food chain. In 2009, the firm spun out its manufacturing operations to form the foundry GlobalFoundries. In 2020, the firm agreed to acquire FPGA-leader Xilinx to diversify its business and augment its opportunities in key end markets such as the data center.
Highlights
- New Acquisition : AMD‘s (NASDAQ: AMD) pending acquisition of Xilinx (NASDAQ: XLNX) is another reason AMD is a buy. Xilinx, the leading designer of field programmable gate arrays (FPGAs), recently reported its fiscal first-quarter results (for the three months ended July 3, 2021) showing the company is back in growth mode
- Current year revenue: the company reported revenue of $16.4 billion, operating income of $3.6 billion, net income of $3.2 billion and diluted earnings per share of $2.57.
- Product Focus: Looking at current and projected computing demands, the AMD team decided that it would be most meaningful to focus on the component that constitutes the fastest-growing segments in datacenter consumption — accelerated computing.
- Long Term Perspective: Over the next decade, AI and HPC deployments will drive significant developments across a variety of fields such as climate prediction, genomics, drug discovery, alternative energy, materials sciences, and speech/image recognition. And researchers may identify other important areas, too.
Quick look at their numbers
1 Year Growth: The stock prices have been constantly moving up, in last 1 year stock has gained over 40%, with the new projects in hand future revenue and growth looks promising.
Quarterly Financial Results
| Y/Y | Q3 2021 | Q/Q | |
| Revenue ($M) | Up 49% | 4313 | Up 12% |
| Gross profit ($M) | Up 67% | 2086 | Up 16% |
| Gross margin % | Up 560 bps | 0.48 | Up 190 bps |
| Operating expenses ($M) | Up 39% | 1141 | Up 7% |
| Operating income ($M) | Up 112% | 948 | Up 27% |
| Operating margin % | Up 7pp | 0.22 | Up 3pp |
| Tax valuation allowance release benefit ($M) | – | – | – |
| Net income ($M) | Down 45% | 923 | Up 6% |
| Earnings per share | Down 45% | 0.75 | Up 7% |
Stock Recommendation: Basis the revenue growth, recent acquisitions & projects in pipeline MarketFacts gives a “Buy” rating on the stock at the closing Price of $100.35 as of October 4, 2021
| CMP (USD) (4 October 2021) | $100.35 |
| Target Price (CAD) | $145.00 |
| Recommendation | Buy |
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