A year-to-date decline of 33% for AMD has been offset by a 20% rally over the past month. Due to weak PC shipments, semiconductor stocks, mainly Intel and Nvidia, have been a tough year. Although AMD is performing reasonably well, its stock is also relatively cheap.
AMD reported a massive 70% revenue increase for the second quarter. Earnings per share adjusted for inflation increased 67% over the previous year. Along with Xilinx’s recent acquisition, data centres also performed well, contributing to growth.
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Reasons to avoid
Gaming graphics processing unit (GPUs) sales declined at AMD, which matches Nvidia’s report. In the gaming hardware market, Nvidia suffers from declining demand for its GPUs.
According to Nvidia’s earnings report on Aug. 24, revenue is expected to decline 17%. A wide range of AMD’s products, including GPUs and CPUs, is making the company’s products perform better than its competitors in the near term.
The 5-nanometer Genoa CPU for servers will be launched by AMD later this year, allowing AMD to gain further market share against Intel’s top CPU competitor.
Based on forwarding earnings estimates, AMD’s price-to-earnings ratio of 22 appears to be a steal, given the company’s growth. There’s just a slight premium over S&P 500 average price.
According to AMD, revenue for the current quarter will be $6.5 billion, up 69% from last year’s period. According to analysts, $5.14 billion was expected. AMD’s revenue will be $26.3 billion in 2022, up 60% from 2021. The company previously forecast a 31% increase in sales.
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