[Moo Brief] AMD Q2 earnings ahead: Will the data center's performance ameliorate pullbacks？

On July 30, $Advanced Micro Devices(AMD.US)$, the key player in the semiconductor sector, sets to release its Q2 financial results for 2024 post-market. Will recent pullbacks be ameliorated after earnings? If $Advanced Micro Devices(AMD.US)$ still has foreseen stock price growth and increasing competitive advantages, is now the time for bottom fishing?

For a long time, many in the market have considered $Advanced Micro Devices(AMD.US)$ to be the second-biggest semiconductor business in the world, trailing only $NVIDIA(NVDA.US)$. Its slightly cheaper GPU and CPU products have served as a substitute for $NVIDIA(NVDA.US)$.

However, $Advanced Micro Devices(AMD.US)$ is currently in an awkward position. Cloud computing giants are increasingly developing their own custom chips, posing a significant threat to $Advanced Micro Devices(AMD.US)$ and leading to lackluster stock performance in recent times.

In the US stock market, there has been a recent sector rotation where some investors are moving from large-cap tech firms to small-cap stocks, possibly due to expectations of a rate cut. This has resulted in a sharp decrease in the market value of large-cap tech stocks like $NVIDIA(NVDA.US)$ and a surge in $Russell 2000(BK20783.US)$. AMD is no exception, having started earlier and experienced even greater declines in its stock price.

Starting July 1, $Advanced Micro Devices(AMD.US)$ tumbled 12% from $157.69 to $138.32 as of July 25 market close, lower than its 52-week high of $211.38 from March 2024.

Moreover, $Advanced Micro Devices(AMD.US)$ had undisclosed issues with the first batch of Ryzen 9000 series GPUs and announced a recall and postponement of the launch to August. Meanwhile, Bloomberg previously reported that the Biden administration plans to implement stricter trade restrictions if semiconductor companies continue to provide China with US-made technology.

   High valuation is another negative factor for $Advanced Micro Devices(AMD.US)$. Despite its return on investment being only 1.7%, and net profit margin being only 4-5%, the stock's PE ratio has reached a staggering 200 times.
   What is more concerning is the often overlooked business gross margin situation. $Advanced Micro Devices(AMD.US)$'s gross margin is around 50%, far behind chip competitors like $NVIDIA(NVDA.US)$ or $Broadcom(AVGO.US)$, both of which have gross margins of around 75%.

If $Advanced Micro Devices(AMD.US)$'s financial indicators improve and its main businesses, data center and client parts, exceed expectations, the market will see positive feedback. But the question is, can it be achieved?
As an investor, do you think $Advanced Micro Devices(AMD.US)$'s financial performance will exceed expectations? Let's lock in for next week!

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