Should You Invest in AMD?

PHOTO CREDIT: AMD

OVERVIEW

Advanced Micro Devices Incorporation is a semiconductor company based in the United States. It makes the bulk of its revenues through the sales of graphics chips and cards under the Ryzen, Radeon, A-Series, and many more. These chips are found in computers, video games, and many other devices. They make stronger chips for data centers and servers around the world as well.

Why You Should?

  1. The COVID-19 Pandemic has boosted the company’s sales of its graphics chips and graphics cards as consumers all around the world purchase computers, PC’s, and video games during these times. This has benefited AMD’s financial results which have caused the stock price to rise.
  2. AMD has acquired several companies in the past to continue to grow in size in the semiconductor industry. They continue to grow to fill the demand for their products around the world and will be a candidate for strong growth in the future.
  3. AMD holds market share in some of the largest industries in the world, just behind NVIDIA in some of these. These industries include the video game industry, the computer and PC industry, as well as the data center and server industry. The world’s future relies on these products and AMD will continue to see rising demand because of this.
  4. If Joe Biden becomes president, he will most likely cool off any tensions with China, a market that AMD can grow in. This will benefit the company’s future growth around the world and will cause the stock price to go higher.
  5. AMD has seen rising revenues and profits over the past couple of financial years and looks to continue this strong growth in the future. This will help the company build a stronger balance sheet and will also help the company grow and expand its presence in the semiconductor market. In the financial year of 2019, the company reported revenues at around 6.7 billion and made about 341 million in profits. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had revenues at around 6.5 billion and profits at around 337 million.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. AMD faces tough competition from several large companies, especially NVIDIA, who offers directly competing products to the ones that AMD offers. This competition along with competition from companies like Intel and Taiwan Semiconductors. This competition might hurt AMD in the future.
  2. AMD has seen its stock price skyrocket due to the reasons mentioned above as well as Wall Street’s bullish stance on semiconductor stocks. This has caused the company to trade at over 100 times earnings, causing more volatility in the stock price. This might hurt short term investors in the company.

MY OPINION

In my opinion, I think that AMD is a great long-term investment due to growth from the COVID-19 Pandemic, strong growth through M&A, having a market share in some of the world’s most valuable industries, and more. However, competition and valuation might hurt the company’s stock price in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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