AMD: The Perfect Setup

Seeking Alpha2022-01-14

SummaryAMD is expected to report its Q4 results in about two weeks from now.Its revenue for the period is likely to come in at $4.45 billion.The company seems well poised to grow rapidly in the ...

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}\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\">\nAMD: The Perfect Setup\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-01-14 11:18 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4479407-amd-stock-the-perfect-setup><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryAMD is expected to report its Q4 results in about two weeks from now.Its revenue for the period is likely to come in at $4.45 billion.The company seems well poised to grow rapidly in the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4479407-amd-stock-the-perfect-setup\">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/4479407-amd-stock-the-perfect-setup","article_id":"1198789257","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1198789257","pubTimestamp":1642130287,"sourceInfo":null,"weMediaInfo":null,"summary":"SummaryAMD is expected to report its Q4 results in about two weeks from now.Its revenue for the peri","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AMD":"美国超微公司"},"translate_title":"AMD：完美的设置","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMD":0.9},"content_text":"SummaryAMD is expected to report its Q4 results in about two weeks from now.Its revenue for the period is likely to come in at $4.45 billion.The company seems well poised to grow rapidly in the foreseeable future.AMD (AMD) is expected to report itsQ4results in about two weeks. Investors would be curious to see if the chipmaker can report a substantial enough revenue beat to keep its shares rallying amidst the ongoing selloff in growth stocks. But in addition to tracking its top line figure, investors should also monitor its average selling price (or ASP) and shipment growth, its segment financials, and its management’s revenue guidance for Q1 FY22. These items will better highlight AMD’s near-term growth prospects and are likely going to determine where its shares head next. Let’s take a closer look at it all.Gauging Market TractionLet me start by saying that AMD caters to different computing end-markets using different product families. It’s got Radeon GPUs, Ryzen 3000/5000 desktop CPUs and APUs, and EPYC server chips, with each of them having their respective share of competitive strengths and shortcomings. So, our first order of business when AMD reports its Q4 earnings call is to assess how competitive these product families were during the quarter amongst its target audience and how that collectively affected its financials as a whole.We have two leading data points at hand that provide us with some insight about how AMD’s Q4 may look like. First, retail prices for almost all GPUs have been on a tear over the last year thanks to the ongoing semiconductor shortages and the cryptocurrency mining euphoria. Although AMD’s GPU prices have tempered sequentially in Q4, they’re still significantly up on a year-over-year basis as well as when compared to their MSRPs. On the other hand, retail prices for AMD’s CPUs are down sequentially, year-over-year, and also when compared to their suggested prices.There’s actually a good reason for this discrepancy in AMD’s GPU and CPU pricing trends. The former product category continues to experience breakneck customer demand and there haven’t been any major launches from its chief rival in the space, NVIDIA (NVDA), in recent months that would materially alter the competitive landscape. On the other hand, in the x86 consumer computing space, Intel (INTC) announced the general availability of its 12thgeneration desktop parts based on 10nm node, which is comparable to AMD’s 7nm node. So, AMD was relegated to discounting its desktop parts in order to remain competitive. Therefore, I contend that AMD’s average selling price will remain flat in Q4.Secondly, we also have Q4 market share data from PassMark across desktop, notebook, and server platforms. They calculate market share figures by aggregating user-generated performance benchmarks that are conducted every day across different x86 platforms. Note in the chart below how AMD’s market share has variably declined in Q4, on a sequential basis, across all three computing platforms.There haven’t been any channel reports of AMD particularly facing an acute supply shortage during the quarter or its fab partner, Taiwan Semiconductor (TSM), being hit by unexpected production snags. So, I believe this market share shakeup in the CPU space took place because Intel’s shipments grew at a rapid pace during Q4 as its 10nm processor matured, and not necessarily because AMD faltered. Overall, with strong GPU demand and modest CPU demand, I expect AMD’s shipment volume to grow at high-single-digit rates in Q4.Financial ExpectationsAMD generates revenue from its two reportable segments. Its Computing and Graphics segment accounted for almost 56% of the chipmaker’s total revenue last quarter and includes the sales of consumer GPU and CPU product families. As previously discussed, I expect AMD’s shipment volume to grow at modest rates and its average selling prices to more or less remain flat in the consumer space. This should result in high-single-digit revenue growth on a year-over-year basis, for its Computing and Graphics segment, with the actual figure coming in at around $2.15 billion.The chipmaker’s second reportable segment, namely Enterprise, Embedded, and Semi-Custom division, accounted for the remaining 44% of its sales last quarter. This segment includes the sales contribution from EPYC server SKUs as well as custom chips built for dedicated applications such as gaming consoles. This revenue stream has grown continuously over the last 6 quarters straight, without exhibiting any signs of cyclicality, and it’s likely to grow yet again.I say this because gaming consoles such as PlayStation 5 and Xbox X, both of which use AMD’s chips, have remained out of stock for the majority of Q4, which is indicative of strong customer demand. The server demand also appears to be robust during the quarter, as seen here and here. Therefore, I expect these factors to collectively drive AMD’s Enterprise sales to at least $2.3 billion. This brings us to a company-wide Q4 revenue estimate of $4.45 billion. Coincidentally, this figure is close to the Street’s revenue estimate of$4.52 billion for the period.As far as Q1 2022 is concerned, a consensus of 29 analysts is forecasting AMD’s sales growth to materially slow down. But that might not happen. With the resurgence of COVID-19 across the globe, major cities have started to close down (like here and here) and they're encouraging work-from-home for the time being. This means the demand for computing devices could remain at elevated levels and AMD could continue growing at a rapid rate for a few more quarters at least. So, investors should pay close attention to AMD management’s revenue guidance for Q1 2022 and FY22 overall.Final ThoughtsThere’s no denying that AMD is surrounded by bearish narratives across various investing forums. Where some believe its acquisition of Xilinx(NASDAQ:XLNX)will be blocked by Chinese regulators, others feel its growth momentum will slow down going forward. But having said that, the data at hand actually suggests that AMD will continue growing rapidly in Q4 2021, and possibly also in Q1 2022. So, I remain bullish on the chipmaker.Investors should keep a close eye on the company’s average selling prices and shipment volume growth, its bifurcated financials, and its management’s guidance. These items will highlight AMD’s growth prospects in the near term and indicate how well it is capitalizing on growth drivers. Good Luck!","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":5,"commentSize":0,"repostSize":0,"favoriteSize":0,"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/1198789257"}