Today's Pick: 🤖 AMD

Bullish on the AI revolution? This stock has an 18% upside over its peers.

💲 Business Model

Advanced Micro Devices, Inc. (AMD) is a semiconductor company that designs, manufactures, and sells x86 microprocessors, chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, and development services. Its products are used in desktop and notebook personal computers, servers, embedded processors, and semi-custom System-on-Chip (SoC) products. AMD also provides professional graphics products, Radeon Instinct, Radeon PRO V-series, and AMD Instinct accelerators for servers, chipsets, microprocessors for servers, embedded processor solutions, customer-specific solutions, and semi-custom SoC products. It sells its products through its direct sales force, independent distributors, and sales representatives.

🚀 Growth Potential

  • Expansion of its Ryzen processor line

  • Introduction of its EPYC server processor

  • Development of its Radeon graphics cards

  • AMD is undervalued by 18% compared to tech peers, making it a great option to diversify your tech portfolio

  • Strong partnerships with tech giants like Apple and Microsoft

⚖️ Intrinsic Value

AMD is currently trading at $111.60.

Best Case:

  • 🟢 Intrinsic Value: $161.79 Undervalued by 31%

  • 🟢 DCF Value: $141.81 Undervalued by 21%

  • 🟢 Relative Value: $181.77 Undervalued by 39%

Worst Case:

  • 🔴 Intrinsic Value: $87.88 Overvalued by 21%

  • 🔴 DCF Value: $39.39 Overvalued by 65%

  • 🟢 Relative Value: $136.38 Undervalued by 18%

👉 DCF (Discounted Cash Flow) estimates the value of an investment based on projections of how much money that investment will generate in the future.

👉 Relative valuation involves the use of similar, comparable assets in valuing another asset.

☎️ Earnings Call Q1 2023 (May 2, 2023):

  • Revenue was $5.4 billion, a decrease of 9% year-over-year.

  • Data Center segment revenue of $1.3 billion was flat year-over-year with higher cloud sales offset by lower enterprise sales.

  • EPYC CPU sales grew by a strong double-digit percentage year-over-year but declined sequentially as elevated inventory levels with some MDC customers resulted in a lower sell-in TAM for the quarter.

  • 28 new AMD instances launched in the first quarter, including multiple confidential computing offerings from Microsoft Azure.

  • Dan McNamara, Senior Vice President and General Manager, Server Business Unit, will attend the Bank of America Global Technology Conference on Tuesday, June 6.

  • AMD's second quarter 2023 quiet time is expected to begin at the close of business on Friday, June 16.

📰 Recent News

Sentiment: 🟢 Positive

AMD announced a new chip used in verifying the design of AI chips and systems. The company's work in this department is an under appreciated part of its AI strategy.

Sentiment: 🟢 Positive

Optimism surrounding AI and AMD's recent related chip release were likely tailwinds for the stock. Investors should also consider other company segments when making investment decisions.

 Sentiment: 🟢 Positive

Apple's potent business has enjoyed stock growth topping 300% since 2018. Meanwhile, AMD has massive potential in the future of AI.

🤔 What do you think about AMD?

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The intelligent investor has no interest in being temporarily right. To reach your long-term financial goals, you must be sustainably and reliably right.

Benjamin Graham, The Intelligent Investor

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