AMD is one of the foremost computer chip companies in the world and continues to create many of the essential elements for the digital world in which we live today. Despite that, AMD’s stock price has slipped in the past year, and competition is always a threat in the tech business.
For investors, these questions are important to understand before putting money in the company and could make anyone wary. Today, we are going to be looking at these questions and answering a few of them, ultimately to decide if AMD is a good stock to buy.
Let’s find out!
Understanding AMD’s Core Business
In order to understand if AMD is a good business to invest in, it’s probably a good idea to understand what products AMD is actually producing.
Simply put, Advanced Micro Devices, Inc. (AMD) is a computer company that specializes in the manufacture of semiconductor devices. These devices are an essential part of modern computing, as they are used to process and store data in computers and other electronic devices. AMD is one of the largest manufacturers of these devices in the world, and it has a strong presence in the global computer market.
In addition to its core business of manufacturing semiconductor devices, AMD also offers a range of services and technologies that are designed to help its customers get the most out of their computers and other electronic devices. This includes providing support and technical assistance, as well as offering software and other tools that can help customers optimize their systems and improve their overall computing experience.
Companies like Apple, Microsft, Sony, Dell, Google, and Meta all use AMD chips in their servers and products, making AMD one of the foremost companies that enable the modern world to run. Understanding this is essential to understanding AMD and its future.
AMD is one of the companies fighting for the right to build the computer chips of the future, but they aren’t the only one.
- Intel is one of AMD’s main competitors. Like AMD, Intel is a leading manufacturer of microprocessors and other computer components. The two companies have a long history of competition, and they often release new products and technologies at the same time in order to compete directly.
- Nvidia is another competitor of AMD. Nvidia is a leading manufacturer of GPUs, which are used in computers and other electronic devices to process and display graphics. AMD and Nvidia often compete for customers in the gaming and professional graphics markets.
- Qualcomm also competes with AMD. Qualcomm is a leading manufacturer of mobile devices, such as smartphones and tablets, and its products often compete with AMD’s in the mobile market.
AMD’s Current Analysis and Stock Price
Let’s take a look at AMD’s current financials, its future outlook, and its stock price. All three will give us some direction as to whether AMD is worth investing in and if the company is due for sustained revenue growth.
As far as financials go, AMD hasn’t been doing all that poorly the past year, at least until it announced its Q3 earnings. Here’s what AMD reported for the past four quarters.
|Q3 2022||Miss -4.87%||Miss -1.50%|
|Q2 2022||Beat 1.37%||Beat 0.32%|
|Q1 2022||Beat 22.12%||Beat 6.48%|
|Q4 2021||Beat 21.38%||Beat 6.54%|
Looking at the past year, it’s important to note a few things. First, EPS (Earnings Per Share) is generally regarded as one of the most important metrics when looking at company growth because it is a representation of growth and profitability after all expenses are paid. Revenue is also important, but it’s less representative as it is the total growth rate of revenue without including things like expenses, since it’s total sales
Knowing that, we can see that AMD has only just started slipping into red regarding the company’s expectations on EPS and revenue. Additionally, this recent slip needs to be grounded in the overall market and what is happening at a global scale.
Currently, interest rates are high, consumer spending is down, fear is high, and the tech sector is getting absolutely hammered in the market). AMD, as a chip maker, is itself a tech company and sells to other tech companies. That information is probably important to note as it relates to the why behind the what.
Answering the question, “Is this company downturn an AMD-specific event related to poor management or company plan, or is it more tied to the greater market?” gives potential investors a clearer outlook on the future of the company.
Future Outlook and Stock Price
Looking at the company news regarding AMD, it seems to be clear that the company is still innovating, competing with top performers in its field, and creating value for customers. Additionally, the core business of AMD, chipmaking, is expected to continue to grow as the world speeds up its embrace of the digitized revolution. In short, everything either has a chip or will need a chip, and AMD seems poised to provide them to buyers.
At the same time, AMD’s stock performance has been pretty poor. Currently, AMD shares are floating around the $70 to 75 range, a full 50% down from the highs of the past two years. Normally, this would be a negative sign for a company’s outlook, but for AMD, it’s likely this is just the result of larger market action and not something the company is specifically doing wrong.
Currently, Intel, Apple, and Qualcomm are all trending in a similar way, giving a bit more credence to the idea that when the market turns bullish again, so will a lot of companies that are still providing value.
Is AMD a Good Stock to Buy?
In our opinion, AMD is probably a good stock to buy and a solid company to invest in. AMD is established as one of the best chipmakers in the world and continues to provide value across an array of mediums. Currently, the share price of the company is down from record highs, but it doesn’t seem that AMD is going anywhere anytime soon, and the future need for AMD’s products doesn’t seem to be declining either.
The current economic snapshot is one of a bear market that is hitting the tech market specifically, catching AMD up in its wake. As things settle and return to stability or even growth, AMD will likely be poised to continue providing chips for the world’s largest companies and markets.
Additionally, the current stock price is likely near the floor (the lowest that a company’s share will dip in a given time period), meaning a timely investment now could have big returns when the economy stabilizes.
AMD has shown strong financial performance in recent years, with revenue and profit growth driven by increasing demand for its products. The company’s strong financial position, coupled with its focus on innovation and commitment to delivering value to its customers, positions it well for continued success in the future. Assuming that AMD doesn’t break any laws or lose product quality, it seems to be ready for growth in the next few years.
Here are some key takeaways to remember:
- AMD makes microprocessors, the brains for computers. The world is accelerating its need for these chips, signaling that AMD is poised for continued growth regarding its core business.
- AMD is currently suffering from overall economic problems like inflation, a strong dollar, and consumer fear, but its core offerings seem to be untouched.
- Currently, AMD stock prices are lower than they have been in years, signaling a potential entry point for investors looking to maximize potential gains while accepting a bit of risk.
- As it stands, AMD isn’t going anywhere and its success seems to be tied to whenever the end of the current bear market starts to change.
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