The chips are(n't) downAnalysts are feeling a lot more upbeat about the chip market, and it's showing in their stock price.
- Shares in AMD rose sharply by more than 9% yesterday, on news that its stock had been upgraded by Barclays analysts. Shares in Nvidia and Intel also jumped up by 7.6% and 3.6% respectively yesterday, as the outlook for the semiconductor industry begins to look more positive after months of uncertainty.
- In the case of Intel however, the rally might be somewhat short lived. One of the reasons for AMD’s upgrade was the belief that it will continue to eat into Intel’s profits, and will overtake it as the market leader in the server market in the future. Intel has fared worse than AMD over the past 6 months – dropping by 20% in comparison to AMD’s 10.9% drop.
- Analysts also reckon that AMD will be able to capitalize on Meta’s metaverse push, which they announced they will be undertaking this year. AMD’s newly developed EPYC processors will be appealing to data center operators, and it's a product for which Intel has yet to develop a competitive equivalent.
Timothy Dykes / Unsplash
Subscribe to Snaps
See the market snapshots that matter and nothing else – sent to your inbox daily. Designed to be read in 20 seconds or less.
It’s all about the outlookSemiconductor manufacturer AMD hasn’t quite met its expectations for last quarter, but investors are pleased it wasn’t even worse.
- Shares in AMD gained 6% on Tuesday after the company posted its Q3 earnings. Its EPS of $0.67 just narrowly missed on analyst expectations of $0.68, with its revenue doing the same at $5.57bn on estimates of $5.62bn.
- Shareholders still seem optimistic about the semiconductor manufacturer as some expected a greater miss on estimates. On top of that, the company saw revenue growth of 28% YoY and acquired chip-maker Xilinx last year – all of which has investors feeling hopeful for the company’s future.
- Demand for shipments of its ‘Genoa’ server chips has also been on the up, with the company poised to launch its ‘Epyc’ data center chips next week. Chips for games consoles will also be in demand as holiday season approaches, putting AMD in a pretty healthy position.
The semiconductor slumpSemiconductor manufacturers are wishing for the good-old-days of the pandemic, as disappointing revenues spark investor fears.
- Semiconductor giant AMD warned of a Q3 revenue shortfall on Thursday which caused its shares to drop by around 4% in extended trading. The group reported $5.6bn Q3 revenue, which fell short of its $6.50bn-$6.90bn projections.
- Other semiconductor manufacturers have been feeling the squeeze too. Micron also reported mixed earnings for September and Nvidia issued preliminary earnings reports far below expectations, leaving investors disappointed.
- It’s a troublesome time for the industry right now, as dwindling demand for PCs after the PC boom of the pandemic coupled with supply chain issues creates a perfect storm.
Timothy Dykes / Unsplash
Semiconductors sail through a rough marketAMD gave the whole semiconductor market a bullish boost after boasting a new sales milestone.
- The stock popped 8% in extended trading on Tuesday after the chip maker destroyed Q1 estimates, reporting EPS that were up 117% YoY to hit $1.13, on revenues that boomed 71% to hit $5.89bn – this is the first quarter AMD’s revenue has passed the $5bn mark.
- All of its individual business lines saw double digit growth in Q1, but one truly bright spark was its high end server chip business, which has been rapidly taking market share from Intel. Analysts have speculated that the PC market is waning, but AMD seems to have sidestepped that trend with 33% growth in that segment.
- The fierce growth is set to continue, leaving investors feeling rather chipper. AMD forecast sales of $6.5bn in the current quarter, way ahead of estimates for $6.38bn, helped by revenue from its now-completed Xilinx purchase – CEO Lisa Su is confident the company will continue growing its market share.
Illustration by TradingView
AMD sharpens its edgesChip giant AMD gives itself an edge in the data center market by finalizing its latest acquisition.
- AMD has officially closed its $49bn acquisition of Xilinx Inc, having received all the regulatory approvals it needed to go ahead with tech’s second largest ever acquisition.
- It gives AMD a real edge in the programmable chip market, which is what Xilinx specializes in, and will help the company “capture a larger share of the approximately $135bn market opportunity we see across cloud, edge and intelligent devices” according to CEO Lisa Su.
- This will intensify its competition with rivals like Intel (INTC) and Nvidia (NVDA), who has just had to give up its attempted Arm acquisition after failing to get regulatory approval. AMD shares shot up 4% on Monday before settling to close up 0.94%.
Risto Kokkonen / Unsplash
Stellar sales guidance makes AMD stock singAMD makes more moves towards chip dominance with a high voltage earnings report.
- Prices saw a power surge of 8% in Wednesday morning trading after Q4 blew past expectations with EPS that were up 26% y-o-y at $0.92, on top of revenues that had nearly doubled to $4.83bn.
- It’s swiftly gaining on Intel’s market dominance. Data center revenue doubled as it made sure to capitalize on a boom in cloud adoption, and its new chip releases boast a performance that tops Intel (INTC) – which saw prices decline after hours even as other chip makers rallied.
- The company is confidently striding into 2022 with FY forecasts for $21.5bn in sales, which would mean a 31% increase from 2021 as the semiconductor maker enjoys heightened demand for PCs and electronics.
Casey Horner / Unsplash
AMDowngradeAMD is having a hard time convincing the bears despite last year’s impressive run-up – are semiconductors coming to the end of their moment in the sun?
- The stock suffered a drop of 5% on Thursday to hit its lowest prices since November 1, extending a sell-off that has wiped 15% off prices so far this year.
- Investors have Piper Sandler to thank for yesterday’s losses. It downgraded AMD to Overweight and cut its price target, positing that its $35bn Xilinx acquisition will create headwinds for its earnings and growth.
- It also thinks the entire personal computer market is due to slow down after an explosion in demand that made 2021 the first year that global semiconductor revenue surpassed $500bn. Could the boom be coming to an end?
Rcardo Gomez Angel / Unsplash
Is AMD the chosen one?AMD is slowly becoming the chosen chip designer of the stars, adding Samsung (005930) to its repertoire.
- Samsung has chosen AMD to partner with for its first in-house smartphone chip
- It’s been making deals left right and center. Tech big dogs like Microsoft and Meta have laid down their loyalties to the growing chip maker, and it’s getting the analyst upgrades to prove it.
- The company pushed out Intel as big tech’s go-to chipmaker, and its CEO Pat Genslinger doesn’t love it. He says AMD is “in the rearview mirror”, but you know what Meatloaf says: objects in the rearview mirror may appear closer than they are.
AMD advancesAMD’s data center success earns it some analyst optimism, optimism that's getting investors feeling chipper.
- The stock bounded ahead 4% on Tuesday, recovering slightly from last week’s tech sell-off that led to AMD’s worst week since April 2020.
- It scored an Overweight rating from KeyBanc, which called it “one of the most compelling data-center growth stories” on the market, citing its exposure to the Cloud and its business with giants like Microsoft (MSFT) and Meta (FB).
- It’s determined to take over the market, highlighting its ambitions at the Consumer Electronics Show (CES) 2022 with a bunch of impressive new chip releases.
Amd Radeon Pro / Unsplash
A top 2022 pickSemiconductor giant AMD starts 2022 with a bang thanks to a bullish Goldman Sachs.
- Prices went up by 4.41% on Monday for a strong start to 2022 after gaining over 56% last year.
- Goldman Sachs (GS) chose the stock as a top pick for 2022, maintaining its buy rating and reiterating its $170 price target – representing an upside of 70% from Monday’s opening price.
- It says the semiconductor giant is enjoying “design win momentum”. It’s slowly building up its market share as an increasing number of tech companies opt for AMD chips in their products.
Zii Miller / Unsplash
AMD gets into bed with MetaAMD pulls ahead in the chip stakes after getting picked by Meta (formerly Facebook) to help build its virtual world.
🤝 AMD jumped 10% on Monday after Meta came on board as its newest chip customer.
🤑 It’s the latest in a line of deals for AMD – it recently won a contract to supply server processors to Microsoft’s (MSFT) Azure cloud service, while Q3 earnings smashed expectations last month.
👑 Intel had better watch out. This is all part of CEO Lisa Su’s plan to regain the top spot and win back the big spenders.
AMD boosts the bullsAMD comes in strong with its third quarter report thanks to surging chip demand, exceeding expectations on both earnings and revenue and getting hopes up for the quarter to come.
Advanced Micro Devices released its third quarter earnings on Tuesday, reporting earnings per share of $0.73 on $4.31 billion in revenue compared to expectations of $0.67 in earnings per share and revenue of $4.12 billion. Earnings are up 16% from the same period the year before, and revenue has increased a whopping 54% in that time as the global chip shortage has sent demand surging for AMD products.
The results have been even more impressive to analysts considering rival chip maker Intel’s (INTC) earnings report last week, which saw sales take a major hit amid the shortage. For a while now, AMD has been delivering where Intel can’t, taking over more of the market share with every earnings report. AMD added a cherry on top of its yummy quarter with its fourth quarter guidance – the chip maker is expecting $4.5 billion in sales for the upcoming quarter, ahead of expectations of $4.25 billion, and hopes to report annual growth of 39%. AMD CEO Lisa Su said:
Semi-custom revenue grew sequentially and year-over-year as demand for the latest Microsoft and Sony consoles remains very strong. We expect semi-custom revenue to increase sequentially in the fourth quarter as we further ramp supply to address the ongoing game console demand.
Cowen analyst Matthew Ramsay, who has an outperform rating and a $120 price target on the stock, said:
We continue to monitor the PC market for signs of demand slowing or supply improving. We believe datacenter passing a quarter of AMD’s business could draw investor attention.We remind investors that the most important business for AMD remains datacenter, which we estimate doubled in 2020, with CEO Lisa Su noting she sees the business momentum accelerating in 2021.
AMD lifted 1% in after-hours trading.
Illustration by TradingView
AMD wins back gamers’ favorAdvanced Micro Devices releases its brand new Radeon RX 6600 – a leaked prototype of which got gamers all worked up in September.
AMD gamers were in a flurry in September after specs for the new Radeon chip were leaked online, causing gamers to accuse the company of favoring crypto miners and their needs over those of the gaming community. AMD denied the rumors at the time, and the new graphics card is not only here, it's optimised for peak gaming performance – easing the fears of the chip-starved gamers.
AMD lifted 3.2% yesterday on the news, closing at its highest price since the beginning of September.
Intel comes after AMDIntel swipes a former AMD chip architect as its new vice president, not long after its CEO Pat Gelsinger claimed that AMD’s dominance would soon be over after the release of its new Alder Lake computer processor.
Intel (INTC) takes another swipe at AMD, taking on one of its former top GPU architects – Vineet Goel – as its new vice president for one of its graphics units. The new hire comes only a week after Intel (INTC) CEO Pat Gelsinger vowed to tackle AMD’s dominance in the market with the company’s new Alder Lake processor, which is apparently much more eco-friendly than AMD’s chips. The CEO wrote:
AMD has done a solid job over the last couple of years. We won't dismiss them of the good work that they've done, but that's over with Alder Lake and Sapphire Rapids.
Only two weeks ago, AMD hired a former Intel (INTC) data centre executive to lead one of its cloud segments, so it’s starting to look like the battle of the Tech Titans.
Could the chip chaos finally be coming to an end?Lisa Su, CEO of AMD, has weighed in on the ongoing semiconductor chip shortage with the optimistic view that the worst of it will be over by the second half of next year. However, she warned that the first half of 2022 could still be a tough one.
Chipmakers like AMD are struggling to catch up with demand from starved gamers and crypto miners, but many have invested in their own chip production plants in the U.S. to combat the shortage, and are hoping the benefits of that will start to show soon. The CEO said:
We’ve always gone through cycles of ups and downs, where demand has exceeded supply, or vice versa. This time, it’s different. It might take, you know, 18 to 24 months to put on a new plant, and in some cases even longer than that. These investments were started perhaps a year ago.
Lisa Su isn't alone in hoping that pressure will be alleviated shortly – Tesla (TSLA) CEO and technoking Elon Musk recently said that he doesn’t see the shortage lasting for the long-term, also citing new plants around the country:
There's a lot of chip fabrication plants that are being built. I think we will have good capacity for providing chips by next year.
Gene Wang / Wikimedia Commons
AMD volunteers as tributeAMD throws its name in the hat and says its ready to produce Arm-based chips.
Shares of AMD lifted over 2% in two hours on Thursday after the chip-making giant said that it is prepared to make chips based on Arm technology, giving the people what they want. Devinder Kumar, AMC’s CFO, said:
We know compute really well. Even ARM, as you referenced, we have a very good relationship with ARM. And we understand that our customers want to work with us with that particular product to deliver the solutions. We stand ready to go ahead and do that even though it's not x86, although we believe x86 is a dominant strength in that area.
Prices closed the day up 0.59%.
Jorge Ramirez / Unsplash
Gamers are sick of sharingAMD gets gamers in a flurry with its new GPU mining chip, which seems to cater specifically to crypto miners.
Graphics card demand is at an all-time high due to the global chip shortage, and after specs for a new AMD mining chip were leaked online, gamers have accused the company of favoring crypto miners and their needs over those of the gaming community.
Devinder Kumar, the company’s CFO, denied the rumors:
That's not a priority for us. We do not prioritize our product or make them for the crypto folks, it is more for the gamers and that's a high priority from that standpoint. What's driven the growth, as you know, we had the Radeon 6000 series high-end GPUs introduced very competitive and that is driving the growth in the GPU space.
Sam Pak / Unsplash
AMD wins big on chip shortageNvidia competitor and champion chip maker Advanced Micro Devices (AMD) has been revelling in the global chip shortage that is making everyone else’s lives miserable, with some mad moves driving an 80% price rise over the past 12 months.
The past few years have been rough for the tech industry, with a serious shortage of semiconductor chips seeing a lot of production lines screech to a halt. But every cloud has a silver lining, and those lucky enough to be in the chip making business have seen record top and bottom line growth. AMD is no exception – its stock doubled in 2020, soaring nearly 50% in July last year. AMD’s main competitors in the CPU market are Intel (INTC) and Nvidia (NVDA), which have also seen meteoric rises on the back of the worsening crisis.
AMD is edging ahead though – the firm made some big moves to gain market share over Intel in the last year, and by Q3 2020 the company held 22.4% of the CPU market: its highest share in 13 years. Business has been boosted by some impressive contracts, including for PlayStation and Xbox consoles and Tesla vehicle gaming rigs – demand for which led to strong Q1 results.
With revenue up 93% in the first quarter and net income more than tripling, it’s been a good year so far.