By Admin88 
Author | Perseus Perspectives
Compilation | Wall Street event
(NASDAQ: AMD) is the world’s second largest CPU and GPU company, second only to Nvidia.In the past few years, the company’s stock price has soared all the way affected by an artificial intelligence boom.However, there are signs that the company’s data center GPU products may not be as hot as initial expectations, and the market seems to worry about high valuation.Guoabong Investment
As the second largest manufacturer of the GPU accelerator market, AMD is in an awkward position.The company’s stocks have previously performed well, hoping to increase market share, because large cloud computing companies try to get rid of their dependence on Nivine, thereby reducing their dependence on single suppliers.However, AMD was severely threatened because cloud computing oversized large -scale manufacturers have developed their own custom chips internally.
Large cloud computing companies such as companies and companies are investing in a large amount of customized silicon wafers to reduce dependence on third -party suppliers such as AMD.Coupled with more and more companies that provide dedicated integrated circuits (ASIC), such as Broadcom, AMD looks particularly fragile.Given the high valuation multiple, AMD’s bull market seems to be reflected in the current price.
AMD’s last announcement of the financial report was at the end of April, and its performance was not impressed by the market.Although both revenue and profits exceeded expectations, the stock price fell nearly 9%on that day.Details determine success or failure.The biggest disappointment is the guidance of AI special income, mainly from the sales of data center GPUs, such as flagship product MI300.CEO Lisa Su predicts that the company’s annual revenue should be about $ 4. billion, which is higher than the previous expected $ 3.5 billion.Surat Stock
On the surface, this seems to be a reasonable result, but when we consider that the analysts believe that the guidance may be closer to $ 50-6 billion, we find that there is a big gap with the consensus.What is even more disappointing is that Su confirmed that the limited guidance is actually a factors related to demand, not due to restrictions.Jinnai Wealth Management
Given that the industry is undergoing large -scale prosperity, AMD’s performance does not reflect the beautiful prospects of market demand.We only need to compare the results with Broadcom. Broadcom disclosed more than $ 3 billion in AI revenue in this quarter, and its stock price rose 9%.We also received a report saying that Broadcom is cooperating with Openai to develop customized AI chips, which clearly shows that they have not encountered any demand resistance.Then, when we consider the large cloud computing company’s customized silicon wafer plan (such as Google’s TPU, Microsoft’s MAIA accelerator, or Amazon’s Trainium chip), AMD’s prospects should ring the alarm.
Why do they just slightly increase product revenue expectations when the entire industry demand is strong, especially when we know that this is not a supply problem?AMD’s demand is significantly weak compared to competitors, which makes the current consensus too optimistic.
The valuation is another negative factor of AMD.Although its return on investment is only 1.7%and the net profit margin is only 4-5%, the stock’s expected price-earnings ratio is nearly 40 times.
What is even more worrying may be the business gross profit margin that is often ignored.The gross profit margin is an indicator of the profit obtained by the company’s direct costs of only production and sales.It first calculates research and development, marketing costs and other projects.
AMD’s gross profit margin is about 50%, which is far behind chip competitors such as Nvidia or Broadcom. The gross profit margins of these two companies are about 75%.This shows that at the product level, AMD’s competitors’ profit margins are much higher.This can most illustrate that AMD’s peers are fundamentally better, and it is likely to create higher profits for shareholders in the next few years.Nvidia’s price -earnings ratio is similar to AMD, while Broadcom’s price -earnings ratio is lower, about 29 times.We paid a higher price for AMD, but received less profits.AMD’s high valuation is based on the expected growth of high income per share, and it is facing multiple threats.Jaipur Investment
The obvious risk is that the adoption rate of AMD GPUs for enterprises and cloud customers is higher than expected.AMD is definitely possible to compete with Nvidia products.The problem of the software layer still exists. This is a obvious advantage of Nvidia, but if AMD can make progress, they can get a considerable market share.
Su Zifeng (Lisa SU) has excellent leadership of the company. Since she served as CEO in 2014, she has changed the company’s destiny.The company may continue to innovate unremittingly and make progress technically.In general, the risk here is obviously downlink risk rather than uplink risk.Considering the performance of Su Zifeng over the past ten years, although the threshold for the general prediction of the market is high, the risk of upward may still exist.
AMD gave a tepid product expectation in the recent income report of its new flagship MI300 chip, which shows that customers did not really come to buy AMD chips.The company is facing fierce competition. There are both ASICs from Broadcom and a custom -made silicon wafer solution developed by large cloud computing companies, such as Google’s new generation TPU.There are a large number of challengers in the field of accelerator chips, with expensive valuationsVaranasi Wealth Management. Compared with their peers, they are more expensive than their peers and their recent demand is lower than market expectations.
Indore Investment