We came across a bullish thesis at Advanced Micro Devices, Inc. (AMD) on Substack by Antonio Linares. In this section, we will summarize the bull thesis on AMD. A division of Advanced Micro Devices, Inc. (AMD) was $141.13 as of November 25.th. AMD’s trailing and forward P/E were 124.89 and 28.33 respectively according to Yahoo Finance.
AMD continues to establish itself as a formidable competitor to Intel and Nvidia, leveraging its chiplet platform to deliver high-quality products and capture market share. While Intel’s dominance in the CPU and PC markets continues, AMD’s strategy of innovation and integration has positioned it to benefit from both increased demand and increased market share. This approach, once successful in CPUs, is now replicated in AI GPUs, a segment in which AMD is seeing rapid adoption despite market impatience and opposition. Mainly, the stock struggled, down 27% from its peak, showing a disconnect between AMD’s performance and the market’s outlook.
AMD’s Q3 2024 results showed its strong progress. AI GPU sales guidance for FY2024 has been revised to $5 billion, reflecting strong growth in the Datacenter segment, which now accounts for 52% of revenue. Companies like Meta and Microsoft are adopting AMD’s MI300 accelerators for demanding tasks, further strengthening its technology. Meta has installed more than 1.5 million EPYC CPUs and is expanding MI300 deployments, with future models such as Llama 4 ready to rely on AMD’s hardware. Accordingly, Microsoft is integrating the MI300 on many applications, underscoring AMD’s ability to meet the needs of leading tech giants.
AMD’s strategic cadence continues to deliver innovation, exemplified by the launch of the MI325X, which offers a 20% inference capability increase over its predecessor. With the MI350 and MI400 on the horizon, AMD is expanding its performance capabilities, moving from imaging to training applications. The company’s focus on building customer trust has driven strong operating margins, with the Datacenter segment achieving a 29% margin in Q3, up 1,000 basis points from last year.
Despite cyclicality in the Gaming and Embedded sectors, AMD remains stable. The Client segment is thriving, with 29% YoY revenue growth driven by demand for Zen 5 processors and Ryzen AI Pro platforms. AMD is poised to capitalize on the PC innovation cycle as consumers shift to AI-enabled devices. In Embedded, AMD’s adaptive SOCs are powering SpaceX satellites, showing its edge in AI workloads at the technological frontier.