AMD Stock Analysis (with Latest ER)

Earnings Highlights

  • First quarter consolidated revenue was $5.9 billion, up 71%
  • Excluding Xilinx, revenue grew 55% year-over-year to a record $5.3 billion.
  • Record top and bottom-line financial results driven by the close of our Xilinx acquisition.
  • Increased net income by more than 60% year-over-year for the last ten quarters.
  • Saw a significantly larger TAM opportunity based on broad a portfolio of compute engines and expanded solutions capabilities.
  • Closed strategic acquisition of Xilinx and announced plans to acquire Pensando

Outlook

  • For the second quarter of 2022, expect an increase of approximately 69% year-over-year and approximately 10% quarter-over-quarter.
  • Expect annual revenue to grow by approximately 60% year-over-year, up from the approximately 31% growth we guided at the beginning of the year.
  • The quarter-over-quarter increase is expected to be primarily driven by Xilinx revenue and server revenue.

Products

Detailed Revenue

  • AMD revenue has been growing quickly in the past two years.
  • 20% CAGR moving forward is much slower than the previous rates.

Financial Health

Strategies

  • Build the best portfolio of high-performance and adaptive computing engines in the industry.
  • Sell diversified products, which could increase synergies and lower risks.
  • Integrate Xilinx’s differentiated AI engine across our CPU product portfolio to enable industry-leading inference capabilities.

Moat

  • AMD’s diversified portfolio might create some network effects if customers want to consolidate the vendors.

Risks

  • Forward revenue CAGR is only~20%

Catalysts

  • Data Center, AI, Automotive, and Embedded markets are all trending right now.
  • Xilinx and Pensando's acquisition could bring strong synergy and momentum.

Conclusion

BULLISH in both the short term and long term.

  • AMD products are well positioned for multiple hottest markets (Datacenter, HPC, AI, etc.), where demands are still larger than supplies.
  • AMD’s finance looks healthy and its valuation looks reasonable.
  • Given the great track record of AMD CEO Lisa Su, it is convincing that AMD will continue to grow quickly in the near future.

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