Curb Your Enthusiasm For AMD: A Valuation Reset Is Underway

Seeking Alpha2022-01-21

SummaryAMD nicely rewarded shareholders in 2021 with big gains, but valuations are stretched and may be peaking.If inflation stays high, interest rates rise markedly in 2022, and company growth slows ...

网页链接

免责声明：本文观点仅代表作者个人观点，不构成本平台的投资建议，本平台不对文章信息准确性、完整性和及时性做出任何保证，亦不对因使用或信赖文章信息引发的任何损失承担责任。

精彩评论

我们需要你的真知灼见来填补这片空白

发表看法

{"i18n":{"language":"zh_CN"},"isChannel":false,"data":{"share":"https://www.laohu8.com/m/news/1116411523?lang=zh_CN&edition=full","thumbnail":"","is_english":true,"pubTime":"2022-01-21 20:09","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"1116411523","market":"us","top_or_hot":-1,"title":"Curb Your Enthusiasm For AMD: A Valuation Reset Is Underway","media":"Seeking Alpha","content":"<div>\n<p>SummaryAMD nicely rewarded shareholders in 2021 with big gains, but valuations are stretched and may be peaking.If inflation stays high, interest rates rise markedly in 2022, and company growth slows ...</p>\n\n<a href=\"https://seekingalpha.com/article/4480696-amd-stock-curb-your-enthusiasm-valuation-reset-underway\">网页链接</a>\n\n</div>\n","source":null,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Curb Your Enthusiasm For AMD: A Valuation Reset Is Underway</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCurb Your Enthusiasm For AMD: A Valuation Reset Is Underway\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-01-21 20:09 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4480696-amd-stock-curb-your-enthusiasm-valuation-reset-underway><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryAMD nicely rewarded shareholders in 2021 with big gains, but valuations are stretched and may be peaking.If inflation stays high, interest rates rise markedly in 2022, and company growth slows ...</p>\n\n<a href=\"https://seekingalpha.com/article/4480696-amd-stock-curb-your-enthusiasm-valuation-reset-underway\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AMD","symbol_name":"美国超微公司","start_time":0,"source_url":"https://seekingalpha.com/article/4480696-amd-stock-curb-your-enthusiasm-valuation-reset-underway","article_id":"1116411523","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1116411523","pubTimestamp":1642766970,"sourceInfo":null,"weMediaInfo":null,"summary":"SummaryAMD nicely rewarded shareholders in 2021 with big gains, but valuations are stretched and may","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AMD":"美国超微公司"},"translate_title":"抑制你对AMD的热情：估值重置正在进行中","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMD":0.9},"content_text":"SummaryAMD nicely rewarded shareholders in 2021 with big gains, but valuations are stretched and may be peaking.If inflation stays high, interest rates rise markedly in 2022, and company growth slows in 2023 as projected, the stock quote is too expensive.Technical momentum to the upside peaked in early August, and seems to be leading price lower since November.XH4D/iStock via Getty ImagesAdvanced Micro Devices (AMD) has undergone an incredible bull run in recent years. However, just like most Big Tech names in the semiconductor space, the advance has become overbought by retail investors and hedge funds. Valuations are extremely stretched (especially measured against spiking inflation rates) and technical momentum is fading fast the last month.Similar to past slowdowns in buying interest, AMD looks to be due for a breather, perhaps dropping below its rising 200-day moving average for a few months during 2022, at a minimum.AMD 2021 Corporate PresentationAMD 2021 Corporate PresentationAMD 2021 Corporate PresentationFuture Growth Already Discounted?I know AMD bulls are not going to agree with this analysis, but I figure AMD's long-term underlying worth is closer to $100, using an equally-weighted combination of 7% CPI and 2% long-duration Treasury debt yields for an acceptable minimum investment return in 2022. If you are not getting at least 4.5% for an earnings yield upfront today, it's hard to argue your investment is keeping up with basic cost-of-living adjustments in America. Today's extended 2.5% earnings yield from AMD is well short of macroeconomic price gains of 7% for the CPI YoY measurement. If you are searching for high returns on your investment capital to match regular CPI advances, AMD actually fails miserably. Assuming zero growth for AMD earnings past 2022 and 7% CPI again this year, its trailing P/E shouldn't be much above 25x currently, with a price no greater than $100.YChartsMeanwhile, a level-headed look at business growth potential does not argue for a material step-up in valuation multiples, maybe even a step down. The question is how to model the company's record profits today and likely during 2022 on the semiconductor supply chain imbalances caused by exaggerated consumer demand for electronics, with record government and central bank stimulus during the pandemic. Below is a graph of P/E highlighting its valuation position in the upper tier of the largest semiconductor organizations.YChartsThe bad news for AMD shareholders is slowing growth is projected by Wall Street analysts past 2022. Even using 2023 EPS estimates around $4, it's hard to believe AMD is worth 35x earnings generation two years into the future, if inflation averages over 5% annually and semiconductor supply/demand worldwide comes into better balance over 12-18 months.YChartsMy point is AMD is more than fully valued based on its exceptional growth projected to take place in 2022. What if a recession in consumer/business demand for semiconductors appears, or rising commodity and labor inflation starts to negatively hurt results soon? Then, AMD moves from a fully-valued position to one of clear overvaluation. It's entirely possible the flattening growth after 2022, pictured below, will actually reverse with others in the cyclical semiconductor industry.YChartsThe PEG function of current price valuations on forward-looking earnings growth expectations is quite high, and nearly the leading number for the peer group. Today's 2.5x multiple is a distance away from numbers considered a bargain under 1.0x.YChartsIf there is any good news in the AMD setup, it's the fact overall valuation metrics are not as overcooked as NVIDIA(NVDA), which I explained in a bearish November article here. At the end of the day, I project NVDA to be a loser to the tune of 50% or greater in 2022-23, from its late 2021 peak price.Corroborating the overvaluation setting for AMD, enterprise value to trailing EBITDA is quite elevated at 45x, while price to cash flow is 50x. Neither of these data points compares favorably with 7% CPI increases. If you go back to the 1970s high inflation-rate years of 7% to 10%, similar leading growth-rate stocks to AMD sold for P/Es under 20x cash flow to properly account for necessary inflation-adjusted returns. Today, the Big Tech semiconductor group is priced for perfection, or something beyond that.YChartsYChartsLastly, price to sales for a rapidly growing business with high profit margins can rise into the 10-15x trailing number range. This is the range AMD has sold since November. However, a review of its 10-year trading history highlights how expensive the stock has become using any type of normalized valuation review. If sales growth rates peaked in 2021 and income does the same in 2022, why doesn't price decline to rationally fit an almost-sure weakening growth trend reality?YChartsYChartsSliding Technical MomentumPerhaps the most worrisome development for bulls in AMD is trading momentum indicators have lagged badly since an early August peak. Effectively, momentum indicators have not been flashing the existence of heavy accumulation, despite the straight up move in price through November.The stock's closing price has been regularly in the middle to low end of each session's trading range, as measured by the Accumulation/Distribution Line. I have marked a blue circle, the bullish trend in the ADL topping in early August. The Negative Volume Index peaked all the way back in April, circled in red. And, the NVI indicator of volume trading on slower news days has been in a rotten downtrend since December, marked with the red arrow. Basically, buyers have been lacking on low-volume days, while sellers have been more aggressive. A major change in trend is the most important note from the NVI.In addition,On Balance Volume has really stunk since early August, with its high point circled in green. There have been just as many aggressive sellers vs. buyers over time measured from August, represented by OBV. My conclusion: despite the 50% AMD price gain from early August into November, underlying momentum to support price has been vanishing. This lack of support is a clear warning signal that price may have to rest for 3-6 months, before material gains will be possible again.StockCharts.comThe fundamental and technical backdrop in combination is most similar to 2017, drawn below. After a multi-year advance, the equity quote took a breather late that year into early 2018. The quote fell -35% over 18 weeks, and \"underperformed\" the equivalent period S&P 500 advance by -45% (not pictured). The ADL, NVI and OBV indicators all peaked months before the final price top, and declined in unison for many months afterward.StockCharts.comFinal ThoughtsPulling all the ideas together, I think it is reasonable to forecast a $100 price target by summertime. This level would place price underneath its 200-day moving average, now around $108, and reset the valuation for stronger quotes in the second half of the year into 2023.Could AMD's quote surprise and rise? You never know with the stock market. However, all Big Tech names appear to be experiencing heightened selling pressure from climbing interest and inflation rates over the past couple of months, while investor enthusiasm for this sector of the market resembles a bubble mania move.Another question you need to ask is whether or not a larger decline than 30% or 40% is approaching for AMD. If a recession in semiconductor demand shows up in late 2022, pricing power implodes, earnings fail to grow and sales stagnate, AMD may only be worth $50 a share. When booms turn to bust, invariably investors look back at valuations and ask how they could have been bid so high. The answer is booms build on themselves over many years, and investors convince themselves nothing can go wrong, disregarding any sense of reason based in long-term math. At market peaks, investor \"speculation\" and dream-making overtakes rational investment analysis.For my money, I will pass on the current AMD setup. I might be more interested in committing capital at lower prices, if the company can deliver another quarter of two of positive results and forward outlooks. Some investors may want to hold AMD if they have large capital gains, and a longer-term investment horizon. I can envision scenarios where the stock trades well above $150 in a year or two, especially if the Federal Reserve can get the inflation rate back under 3%.For the average retail investor, I would keep AMD as a minor position in portfolio construction, or just avoid the name altogether until a sensible valuation reappears. Assuming upside potential is $170 in 12-18 months, does the reward justify a potential worst-case scenario loss to $50 a share? I believe waiting for sub-$100 a share is the smarter decision for new investors. There's no harm being patient in today's stretched Big Tech valuation environment, unless of course your goal is short-term riches through speculation/gambling. Just remember, the vast majority of gamblers leave the casino far poorer than when they entered.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":7,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":false,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"laohu8","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1116411523"}