AMD Stock Analysis: Why it's a real opportunity for AI
The stock market $Advanced Micro Devices(AMD.US$ I wasn't too impressed with the first quarter earnings report. We were expecting some kind of astonishing numbers due to the tailwind of artificial intelligence (AI), but since chip makers failed to achieve those high goals, AMD's stock price fell.
The company's stock price has since regained lost ground, but there is still an opportunity for investors to profit by taking advantage of the short-sightedness of the market. It is precisely thanks to AI that Advance Micro Devices are performing so well. This shows the ability of this chip maker.
AI power boost
Advanced Micro Devices' revenue fell 11% from the previous quarter to 5.47 billion dollars, which was due to seasonal factors. Sales increased 2% from the previous year, which exceeded the median guidance given by the company. This increase is mainly due to a significant increase in AI sales. Analysts estimate that AMD has earned 600 million dollars in data center AI graphics processing unit (GPU) sales. This is up from $0 a year ago.
It's clear that AMD is off to a strong start with the new MI300X chip. Advanced Micro Devices has entered the market and is seizing market share. $NVIDIA(NVDA.US$ There is almost no possibility that it will win the same position. But that's not a problem. The AI market is rapidly expanding, and there is plenty of room for success with multiple investments.
AMD's profitability also expanded significantly, and gross margin increased 150 basis points to 52.3%. Net profit was $1 billion, and earnings per share increased from 60 cents the previous year to 62 cents.
As clouds, data center operators, and hyperscalers focus on acquiring AI accelerators, the data center business is likely to be the biggest factor driving AMD's growth. AMD predicts that data center GPU revenue will exceed 4 billion dollars, and suggests that AI GPU sales may approach 1 billion dollars at this growth rate. As chipmakers expand and accelerate their AI hardware and software roadmaps, AI sales could exceed $4 billion this year.
The PC is still a hindrance
While the data center business is doing well, AMD's client division (mostly PCs) remains sluggish. The central processing unit (CPU) division achieved rapid growth of 80% compared to the previous year and 2% compared to the previous quarter due to strong sales of AMD Ryzen 8000 series chips, and this is due to the fact that comparison targets have become much easier. Last year was a terrible year for PC CPUs, so it was a standard that could easily be surpassed.
AMD has also increased its market share in this field, and adoption of EPYC CPUs is accelerating. According to the company, $American Airlines(AAL.US$ 、 $Shell(SHEL.US$ It is said that many large companies, such as SD Micro, are increasing the introduction of the same chip.
Notably, AMD announced that Lenovo will use EPYC CPUs on two new platforms, particularly the ThinkAgile MX455 V3 Edge Premier Solution. This is $Microsoft(MSFT.US$ Azure Stack is an AI-optimized platform for HCI, and it is a hybrid product that provides cloud-based services by connecting an enterprise's on-premise system to the Azure platform.
AMD stock is the only stock that should win
AMD is $Intel(INTC.US$ And it will continue to dominate Windows-based systems for years to come. $Apple(AAPL.US$ Made in-house $Arm Holdings(ARM.US$ Some customers have been able to migrate away from these chips, as we did with base chips, but it's not easy.
Furthermore, Intel has failed many times due to the transition to a foundry system. Meanwhile, AMD $Taiwan Semiconductor(TSM.US$ It has maintained that position due to its strong relationship with. Thus, this chip maker may be able to further seize market share from rivals.
Coupled with the rapid expansion of AMD's AI products, AMD stock is rapidly becoming a potential investment destination with the greatest opportunities for growth. Maintaining the growth rate so far will become increasingly difficult, especially for Nvidia, which faces incredible competitors as the year progresses.
In other words, there is a possibility that Advanced Micro Devices will experience a similar growth rate in the future. The scale of the business may not be comparable, but there is a high possibility that AMD stock will win.
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