Is AMD Stock Worth Buying Before 2025?

00:12:40
https://www.youtube.com/watch?v=MR1ikcmnDkA

Summary

TLDRThe video highlights AMD's remarkable transformation over the past decade under the leadership of Lisa Su, who brought the company back from near bankruptcy. As of now, AMD has become a strong contender in the semiconductor market, especially against historically dominant Intel. Despite facing some recent underperformance due to competitive pressures and market comments from Amazon, AMD is projected to achieve substantial growth, notably in the AI and data center market segments. Analysts have an optimistic view of AMD's potential, expecting their revenue and free cash flow to increase significantly. The company's strength lies in its innovative architecture and strategic focus on AI, even as NVIDIA currently leads the sector. The video concludes by asserting AMD's potential as a valuable investment and teases a discussion on Intel in a future video.

Takeaways

  • ๐Ÿ’ก Lisa Su's leadership has revitalized AMD.
  • ๐Ÿ“‰ AMD stock experienced recent declines due to market reactions.
  • ๐Ÿ“Š Analysts project a 33.4% price increase for AMD.
  • ๐Ÿ”Œ Data center growth is a key focus for AMD.
  • ๐Ÿ” Misunderstanding of AMD's potential by the market.
  • ๐Ÿค– Strong AI segment expected to drive AMD's future revenue.
  • ๐Ÿ“ˆ AMD's historical market cap growth highlights its turnaround.
  • ๐Ÿ† NVIDIA is currently the AI market leader.
  • ๐Ÿ’ธ Free cash flow expected to reach $9.33 billion by 2026.
  • ๐Ÿ’ผ Strategic focus on delivering best-performing products.

Timeline

  • 00:00:00 - 00:05:00

    The speaker discusses the impressive turnaround AMD has experienced in the past decade, largely credited to CEO Lisa Su. From the brink of bankruptcy, AMD is now a significant competitor to Intel, experiencing a market cap increase of over 5,000% in ten years. This year started strong with a 43% increase, although there's some underperformance with a 6% decline year-to-date, exacerbated by market reactions to Amazon's comments on AI chip demand. Despite attention shifting to Nvidia and other companies designing their chips, the speaker believes AMD remains a powerful player. The speaker forecasts potential outperformance from AMD in 2025 compared to 2024 and plans further analysis on Intelโ€™s situation.

  • 00:05:00 - 00:12:40

    The speaker analyzes market sentiment regarding AMD, noting a significant discrepancy between current stock prices and analyst expectations, with a predicted price target 33.4% higher than current levels. Metrics like forward P/E and price to sales are favorable compared to historical means. Despite AI's growing influence, AMD's AI revenue is more modest than anticipated, but projections indicate significant growth in free cash flow in coming years, driven by the data center segment. Concerns arise from Amazon's hesitation to offer AMD's AI chips, attributed to low demand, while AMD maintains partnerships with major tech companies. The market likely overreacted to AWS's statements, overlooking AMD's growth potential and strategic breakthroughs in AI technologies. The video shifts focus to potential long-term returns and strategic positioning for AMD in the tech market.

Mind Map

Video Q&A

  • What is the historical context of AMD's growth under Lisa Su?

    Lisa Su transformed AMD from near bankruptcy to a major competitor against Intel, with a significant increase in market cap.

  • Why has AMD underperformed recently despite previous gains?

    AMD's recent stock performance has been affected by market reactions to comments from Amazon and competition from companies like NVIDIA.

  • How does the market view AMD's future?

    Analysts have a higher price target for AMD, with anticipation of growth in their data center AI segment.

  • What was Amazon's impact on AMD's stock?

    Amazon's lack of commitment to AMD's AI chips due to insufficient demand negatively impacted AMD's stock.

  • What are the expectations for AMD's financial performance?

    AMD's data center AI revenue is expected to exceed $5 billion in 2024, with significant free cash flow growth projected in subsequent years.

  • How does AMD compare to NVIDIA and Intel?

    While NVIDIA leads in AI, AMD is a solid number two, focusing on improving data center products, and it competes with Intel in the CPU market.

  • What are the main challenges AMD faces moving forward?

    AMD faces challenges from evolving market demands and competition from companies like NVIDIA in the AI segment.

  • Is AMD expected to maintain its growth trajectory?

    The company is projected to continue growing, particularly in its AI and data center segments, but market conditions and competition will impact its pace.

  • What role does the data center segment play in AMD's future?

    The data center segment is a key growth driver for AMD, with expectations of significant revenue contributions in the coming years.

  • How does the video assess AMD as an investment?

    The video suggests that AMD may be undervalued by the market, and with its potential in AI and other segments, it could be a strong investment choice.

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  • 00:00:00
    as an Intel shareholder I always have to
  • 00:00:02
    give credit to AMD and especially Lisa
  • 00:00:05
    Su since she came in what over 10 years
  • 00:00:07
    ago 10 years ago AMD was close to
  • 00:00:11
    bankruptcy 10 years ago intel was number
  • 00:00:14
    one and it wasn't even close Intel has
  • 00:00:17
    so much money didn't even know what to
  • 00:00:18
    do with that and that's why they were
  • 00:00:19
    just buying back a lot of shares even
  • 00:00:21
    though shares were expensive paying a
  • 00:00:24
    nice dividend even though they should
  • 00:00:25
    have focused more on making sure the
  • 00:00:28
    next products are going to be better
  • 00:00:30
    than the previous ones Focus maybe on AI
  • 00:00:34
    right if you have a Visionary CEO
  • 00:00:35
    Visionary team should have seen AI
  • 00:00:38
    coming right that didn't happen Lis ASU
  • 00:00:41
    came in at MD turn it all around new
  • 00:00:44
    architecture and now is Comfortably
  • 00:00:46
    let's say the number two I mean if you
  • 00:00:48
    look at the performance in the last 10
  • 00:00:50
    years it's up over 5,000% market cap
  • 00:00:54
    Wise It's well more than double that of
  • 00:00:57
    Intel but yes this year this year we've
  • 00:01:00
    seen some underperformance by AMD at the
  • 00:01:04
    start of the year not so much at the
  • 00:01:06
    start of year this was up 43% but now
  • 00:01:09
    year today the stock is down
  • 00:01:11
    6% so what exactly is going on here we
  • 00:01:15
    also had a comment from someone at
  • 00:01:18
    Amazon that well wasn't really well
  • 00:01:22
    received by the market and that's why
  • 00:01:23
    the stock went down in the last couple
  • 00:01:25
    of days but just because all the
  • 00:01:28
    attention is going towards Nvidia or
  • 00:01:31
    even some hypers scalers right cuz
  • 00:01:33
    they're all designing their own chips I
  • 00:01:36
    think I think it's unfair right now to
  • 00:01:40
    disregard MD as a big player here of
  • 00:01:43
    course Nvidia number one by far but I
  • 00:01:47
    think MD as the number two especially at
  • 00:01:50
    these
  • 00:01:51
    prices I mean with the current
  • 00:01:53
    projections which we're going to go over
  • 00:01:55
    in this
  • 00:01:55
    video I think 2025 we could see AMD
  • 00:01:59
    outperform 2024 underperform 2025
  • 00:02:03
    outperform I'll make a separate video
  • 00:02:05
    about Intel because whatever is going on
  • 00:02:07
    there is is very interesting right now
  • 00:02:10
    Pat Ginger still has CEO of Intel in his
  • 00:02:13
    bio on X is now tweeting out and
  • 00:02:15
    responding to some tweets it's very very
  • 00:02:19
    interesting very very interesting
  • 00:02:21
    anyways focusing back on MD let's talk
  • 00:02:24
    about the stock and let's talk about the
  • 00:02:27
    recent announcement and why I think the
  • 00:02:29
    market is is just overreacting yet again
  • 00:02:32
    if you enjoy this type of vide leave it
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    a thumbs up subscribe if you have not
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    really appreciate that if you want to
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    support me even further do check out the
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    link down in the description and the P
  • 00:02:39
    comment with the top 10 best stocks to
  • 00:02:40
    buy now or go to full.com couch investor
  • 00:02:43
    thank you very much I do want to first
  • 00:02:45
    start by showing you the let's say
  • 00:02:47
    Market sentiment or the analyst
  • 00:02:49
    sentiment towards MD because currently
  • 00:02:51
    the average analyst price Target sits
  • 00:02:54
    33.4% higher than the price we're at
  • 00:02:56
    right now if we look at some pricing
  • 00:02:59
    metrics forward P Price to sales price
  • 00:03:01
    to free cash flow forp 30.6 times
  • 00:03:04
    compared to 37.6 times Eva 30.7 times
  • 00:03:09
    price to S 7.3 times which is very close
  • 00:03:11
    to the 5year mean here price to free
  • 00:03:13
    cash flow that's in the last 12 months
  • 00:03:15
    that's expected to be much much better
  • 00:03:17
    in the next 12 months as you will see
  • 00:03:19
    later in this video and then price
  • 00:03:21
    earnings to growth 72 under one is
  • 00:03:25
    undervalued I think this company is just
  • 00:03:27
    misunderstood right now and I would
  • 00:03:31
    agree I would agree and this what I've
  • 00:03:33
    been saying for a long long time I would
  • 00:03:34
    agree that with all the AI momentum
  • 00:03:37
    let's say with everything that we've
  • 00:03:38
    seen with Nvidia you would have thought
  • 00:03:41
    that maybe AMD from the AI side would
  • 00:03:45
    have grown much quicker right would have
  • 00:03:47
    grown much more than what we have seen
  • 00:03:50
    it's true that data center Revenue has
  • 00:03:52
    increased quite quickly this year way
  • 00:03:54
    more than all the other segments I mean
  • 00:03:57
    there's faced some headwinds with
  • 00:03:58
    regards to gaming
  • 00:04:00
    but yeah data center is up quite a lot
  • 00:04:03
    they've talked about revenue from AI
  • 00:04:05
    exceeding $5 billion for the year which
  • 00:04:07
    is more than last quarter what they told
  • 00:04:09
    us last quarter and definitely way more
  • 00:04:12
    than what they told us at the start of
  • 00:04:14
    the year but again it's only $5 billion
  • 00:04:18
    Market was probably expecting a bit more
  • 00:04:21
    all in all last quarter these were the
  • 00:04:23
    numbers so data center Revenue really
  • 00:04:25
    not an issue year-over-year growth and
  • 00:04:26
    quarter over quarter growth very very
  • 00:04:28
    strong there client one growing year
  • 00:04:31
    over year and quarter over quarter with
  • 00:04:33
    regards to gaming some weakness there
  • 00:04:34
    and embedded as well still seeing some
  • 00:04:37
    weakness now remember I said with
  • 00:04:40
    regards to free cash flow the next 12
  • 00:04:41
    months the pricing metric there will be
  • 00:04:44
    much much better and that's because of
  • 00:04:46
    this last 12 months free cash flow were
  • 00:04:48
    at 1.55 billion but for fiscal 2024 that
  • 00:04:52
    number is basically expected to be
  • 00:04:54
    closer to $3.7 billion then in fiscal
  • 00:04:58
    2025 it's expected to grow by 90% And
  • 00:05:01
    then in fiscal 2026 by another 33%
  • 00:05:05
    reaching 9.33 billion in free cash flow
  • 00:05:09
    just two fiscal years from now now how
  • 00:05:12
    will they reach those numbers well it's
  • 00:05:14
    probably again thanks to the data center
  • 00:05:17
    side of the business if you look at
  • 00:05:19
    operating income for the company well
  • 00:05:21
    the large majority comes from data
  • 00:05:24
    center then you've got client and gaming
  • 00:05:27
    now of course if we compare it to the
  • 00:05:28
    other two to Nvidia which Nvidia is the
  • 00:05:31
    green one here that's Nvidia gross
  • 00:05:32
    profit margin in the League of Their Own
  • 00:05:35
    if we look at MD for example which is
  • 00:05:37
    orange line right here has been
  • 00:05:39
    recovering right has been recovering
  • 00:05:41
    since Q2 2023 not by much but we're now
  • 00:05:44
    at
  • 00:05:45
    52.1% and of course compared to Intel
  • 00:05:48
    well it's much much better but then
  • 00:05:50
    again Intel also has a Foundry side of
  • 00:05:52
    things so it's not always Apples to
  • 00:05:54
    Apples now what brought the stock down
  • 00:05:57
    was basically this Amazon isn't seeing
  • 00:05:59
    enough demand for amd's AI chips to
  • 00:06:02
    offer them via its Cloud AWS has not
  • 00:06:05
    committed to offering Cloud access to
  • 00:06:07
    amd's AI chips in part due to low
  • 00:06:10
    customer demand AWS said it was
  • 00:06:12
    considering offering amd's new AI chips
  • 00:06:15
    last year MD recently increased the
  • 00:06:17
    sales forecast for its AI chips which
  • 00:06:20
    again is making all of this quite
  • 00:06:23
    laughable so Hut said the following we
  • 00:06:25
    follow customer demand if customers have
  • 00:06:27
    strong indications that those are needed
  • 00:06:30
    then there's no reason not to deploy AWS
  • 00:06:33
    is not yet seeing that high demand for
  • 00:06:36
    amds AI chips AWS provided Cloud access
  • 00:06:39
    to other AI chips such as Nvidia gpus at
  • 00:06:42
    reinvent AWS announced the launch of P6
  • 00:06:45
    servers which come with nvidia's latest
  • 00:06:47
    Blackwell gpus AWS and AMD are still
  • 00:06:51
    close Partners according to Hut AWS
  • 00:06:53
    offers Cloud access to amd's CPU server
  • 00:06:56
    chips and amd's AI chip product line is
  • 00:06:59
    always under consideration an AMD
  • 00:07:01
    sportsperson said it did not have a
  • 00:07:04
    comment on hot statement but reiterated
  • 00:07:06
    the Dr Lisa suet company has multiple
  • 00:07:09
    public customers including Microsoft
  • 00:07:12
    Azure meta Oracle IBM cloud and others
  • 00:07:16
    like tensor wave and NS scale that have
  • 00:07:18
    talked about their use of the AMD
  • 00:07:20
    Instinct accelerator and the benefits
  • 00:07:23
    and the demand for them the spokesperson
  • 00:07:25
    also noted meta is using amd's Instinct
  • 00:07:28
    as the soul
  • 00:07:30
    accelerator on the Llama 3.1 45b model
  • 00:07:35
    now we're already at Lama 3.3 so let's
  • 00:07:37
    see what happens with that while
  • 00:07:39
    Microsoft said that instinct provides
  • 00:07:41
    them the best price to Performance for
  • 00:07:44
    GPT 4 inference on Microsoft Azure and
  • 00:07:47
    remember last quarter Lisas Su talked
  • 00:07:49
    about well the next products that are
  • 00:07:52
    coming out for AMD so it shed the
  • 00:07:54
    following we have successfully
  • 00:07:56
    accelerated our product development Pace
  • 00:07:58
    to deliver an annual Cadence of new
  • 00:08:00
    Instinct products our next gen Mi 350
  • 00:08:03
    series is looking very good and is on
  • 00:08:05
    track to launch in the second half of
  • 00:08:07
    20125 with the largest generational
  • 00:08:09
    increase in AI performance we have ever
  • 00:08:12
    delivered development on our Mii 400
  • 00:08:15
    series based on the cdna NEX
  • 00:08:17
    architecture is also progressing very
  • 00:08:19
    well towards a 2026 launch we've built
  • 00:08:22
    significant momentum across our data
  • 00:08:24
    center AI business with deployments
  • 00:08:27
    increasing across an expanding set of
  • 00:08:29
    cloud Enterprise and AI customers as a
  • 00:08:32
    result we now expect data center GPU
  • 00:08:34
    Revenue to exceed $5 billion in 2024 up
  • 00:08:38
    from 4.5 that they got it back in July
  • 00:08:41
    and the original $2 billion when they
  • 00:08:43
    started the year of course that's great
  • 00:08:46
    but then the question will be what
  • 00:08:48
    happens in 2025 that's maybe what the
  • 00:08:51
    analysts right now are waiting for right
  • 00:08:53
    probably the next quarter okay exceeding
  • 00:08:56
    $5 billion for 2024 great
  • 00:09:00
    but what about 2025 what's that number
  • 00:09:02
    going to be are we going to grow much
  • 00:09:05
    quicker are we going to go to 7 7.5 8
  • 00:09:10
    could they double that maybe maybe not
  • 00:09:13
    so we're now in a phase where okay the
  • 00:09:16
    stock is down for the year has seen very
  • 00:09:19
    very weak actually in the last couple of
  • 00:09:21
    months but what's next what's next are
  • 00:09:25
    you going to wait to see what's next or
  • 00:09:27
    are you going to take a chance right now
  • 00:09:28
    and say look
  • 00:09:30
    the Revival of AMD 10 years ago tells me
  • 00:09:33
    that this company knows what they're
  • 00:09:35
    doing yes of course now they're not
  • 00:09:37
    fighting Intel they're going to fight
  • 00:09:40
    Nvidia but to be honest I don't even
  • 00:09:43
    think they're fighting Nvidia per se
  • 00:09:45
    since this Market is so big we're still
  • 00:09:47
    very very early days here so they're
  • 00:09:51
    fighting themselves let's say their own
  • 00:09:54
    engineering let's provide the customers
  • 00:09:57
    with the best products and if it's the
  • 00:09:58
    best product out there best performance
  • 00:10:00
    or the best price is probably going to
  • 00:10:03
    sell logically speaking and so right now
  • 00:10:07
    looking at the stock still still here in
  • 00:10:10
    between waiting it's going to look quite
  • 00:10:13
    interesting if we actually reach the
  • 00:10:15
    next earnings report and that's when
  • 00:10:17
    this stock actually moves out I don't
  • 00:10:19
    always believe in technical analysis but
  • 00:10:22
    I've seen so many of those already in
  • 00:10:24
    the past couple of years and yes
  • 00:10:26
    sometimes they do work out to the dot
  • 00:10:28
    which is pretty crazy anyways here on
  • 00:10:31
    the weekly we're back under the 20-day
  • 00:10:33
    moving average the stock did not stay
  • 00:10:36
    above that but we finished the week as a
  • 00:10:39
    green candle RSI is pretty neutral right
  • 00:10:42
    now so yeah we're back under $140 and to
  • 00:10:46
    be honest I mean yeah if you only look
  • 00:10:48
    at the pricing metrics and stuff like
  • 00:10:50
    that then it paints you half the picture
  • 00:10:53
    because we're talking here about MD
  • 00:10:55
    we're not talking here about a company
  • 00:10:57
    that will I don't know I can't
  • 00:10:59
    come up with a good example here but
  • 00:11:01
    with MD with these types of companies
  • 00:11:03
    it's also important to look at the
  • 00:11:05
    products the product road maps look at
  • 00:11:07
    some interviews here and there to
  • 00:11:08
    understand why is the company trading at
  • 00:11:11
    those multiples there's probably a
  • 00:11:13
    reason for that right so yeah you have
  • 00:11:15
    to look at the releases The Benchmark
  • 00:11:17
    numbers for the next gpus the CPUs etc
  • 00:11:20
    etc what the what do the customers say
  • 00:11:23
    do they like it do they don't don't like
  • 00:11:25
    it etc etc we've seen a lot of hype
  • 00:11:27
    around Qualcomm and arm-based
  • 00:11:29
    computers coming out right what happened
  • 00:11:33
    we haven't we haven't heard anything
  • 00:11:35
    since then right since that announcement
  • 00:11:36
    they got a lot of attention now nothing
  • 00:11:39
    anymore now I'm not saying that they're
  • 00:11:42
    not going to be successful but sometimes
  • 00:11:45
    there's a lot of hype sometimes there's
  • 00:11:46
    a lot of noise it's always important to
  • 00:11:48
    actually dig a little bit deeper and see
  • 00:11:51
    what the heck is going on with MD even
  • 00:11:54
    me as an Intel shareholder I can see
  • 00:11:56
    that there is a lot of value here and
  • 00:11:59
    there is some misunderstanding yes it's
  • 00:12:01
    true there are some question marks for
  • 00:12:05
    2025 but I mean lisu already proved
  • 00:12:09
    everyone wrong do we doubt her again I
  • 00:12:13
    don't think so anyways I think going
  • 00:12:16
    2025 could be a let's say contrarian
  • 00:12:19
    pick AMD I'm still going with Intel
  • 00:12:22
    which I know is crazy but I'll explain
  • 00:12:24
    it in another video anyways if you enjoy
  • 00:12:26
    this type of videos leave it a thumbs up
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    subscribe if you have not and I see you
  • 00:12:29
    all in another one bye-bye
  • 00:12:33
    [Music]
Tags
  • AMD
  • Intel
  • Lisa Su
  • Stock performance
  • AI
  • Data center
  • NVIDIA
  • Market analysis
  • Investment
  • Semiconductors