Advanced micro devices (NASDAQ: AMD) She was one of the worst supplies he owned in the last year. While investors were excited about AMD that potentially take a market share of rivals Nvidia In all the important market of the data center, this did not manifest. Furthermore, the rest of AMD’s business was quite ho-hum, which caused the drop in shares in the last year.
Ever since he reached the peak last March, the shares have fallen over 50%, while most of the other shares are on the market. If you had invested in Nvidia, on the other hand, you would have been up over 50%. It’s a huge mismatch in the performance, but is it possible for AMD to turn it? After all, a 50% fall could be a huge opportunity to profit from a turnaround.
While Nvidia focuses on one thing, Graphics processing units (GPU)AMD is much wider. There are offers comparable to Nvidia’s, but they did not remove the Data Center on the market, and AMD continuously states Nvidia in this segment. Last year, the thesis was that AMD could take away a market share of Nvidia because the focus in AI turned to workout to conclude, but that download never manifested.
In the Fiscal Fourth quarter of the AMD (completed on December 28), the data center revenue increased by 69% compared to the year to $ 3.86 billion. Although it sounds like a strong performance, it fades compared to what Nvidia has done. The NVIDIA Data Center Department increased the revenue of 93% to $ 35.6 billion during its fiscal Q4 (completed on January 26) -almost 10 times more than AMD.
This part of the AMD investment thesis was obviously wrong, and the main factor is in the fall of shares. However, other AMD segments didn’t help much.
The client’s revenues were a lonely strong point, increasing 58% compared to the year. This makes all the CPU -ai GPU that AMD creates for laptops and computers bought by a general consumer. This is still an important market, but it’s just so much money to make money in a sector that has become quite comfortable, because there is no huge increase in performance from one service provider.
The rest of the results of AMD were bad. Game revenues (GPUs dedicated to PCs and consoles) fell 59% of the year and built-in processors (chips designed in special, energy efficient purposes) were reduced by 13%.
Overall, AMD revenue growth increased by 24% compared to the year, which is not bad. However, expectations were far higher than that, which is why the stock is currently so unpopular with the Wall Street.
AMD had some unusual one -off costs last year, so the use of a ratio of residual prices until earnings (P/e) does not give investors much insight into the company. I will use instead Forward p/e ratiobecause it does not include these one -off costs that are difficult to project. From this point of view, AMD -‘s estimate has been significantly reduced last year.
