AMD Longs Temporarily Suffer Dip

The community has been actively watching AMD’s huge dip of 23% in the last few days following a strong announced earnings last week – leaving the majority puzzled. AMD has fallen drastically closing at an astonishing low of $3.18 today for a third consecutive plunge. Although there are many speculations as to why the stock has taken such a huge hit, the most common conclusion is that AMD PC sector declined 15% from last year, including the desktop increase of 5%. Although I like to stay away from drawing these kinds of conclusions, a lot of speculators are blaming a stock manipulation by hedge funds and analysts. To them I say it is a possibility but you’ll never have enough information to prove them guilty. Although the current situation is bad, it’s really only painful to those who cash out now and don’t take advantage of the poor conditions.

With this dip considering the long term: AMD is at a huge discount and whether or not the stock will fall any more is hardly a concern for the long run. Sure there may be a guy who will be getting a good deal if they buy at a lower price but in the long term even those who bought shares prior to the earnings still got a deal worth keeping. The only thing the last few days have done to longs is delay their profits – just like the housing bubble delayed people’s retirements.

The most positive outlook is to look at the facts. AMD posted their first profit in years and generated free cash flow for the first time since 2010, where the stock was hovering around $9.00. They also posted an earnings and Q4 guidance that beat analysts’ expectations. Over the past few years, AMD has been suffering from strong headwinds from Intel’s lineup over the years and a declining PC market. Based on the rubbish CPUs AMD has produced over the years it’s fortunate to still see them around.

AMD is in the middle of a major restructure with the first stage now complete. The completion of this stage has allowed AMD to increase their profits while cutting costs – commonly unheard of but given AMDs circumstances, necessary. AMD’s next stage is to focus on their new product lineup and unfortunately this is going to be a waiting game, but looks promising. The new R9 290x and some of the benchmarks released shows a promising card for the price and we can only hope to see this kind of progress in the future. AMD’s APUs have made substantial progress and I’m excited to see what’s to come.

Conclusion

Although our vision tends to get a bit blurry when shares of a stock you own lose 25% of their value based on facts that are unclear to many, it’s hard to see it last for long. Who knows how long the dip will continue down, but with the current circumstances AMD can only be viewed as a hold / buy.

AMD Beats Estimates, Shares Fall

Earlier this week I was excited to announce that shares of AMD may finally be jump started today after announcing their earnings for Q3. They announced revenues of $1.46 Billion, earning $0.06 per share and a net income profit of $48 million, making for the first profitable quarter this year. 

My thoughts on this is very positive yet shares have still taken a hit of 7% after hours. AMD has announced fantastic partnerships, news, and technologies lining itself up for future growth, but unfortunately the results weren’t strong enough to please investors this quarter.

Hopefully with strong console sales, a slightly rebounding PC market and a well-positioned stance for the future,  AMD may be able to start a turn around through the holiday season, but we’ll just have to wait and see. All in all, AMD has gained momentum and some lost ground over the last two quarters and still has a rough road ahead of it. 

AMD Closed today at $4.09 and as of now trading at $3.80 in after hours.

I have been long AMD for the last fourteen months and will continue to hold for years to come due to the strong potential that I see in AMD.  

AMD’s New Hawaii Series Graphics Cards

The ASUS Branded Version of AMD’s R9 280X Graphic Card

Last month AMD announced five new graphics cards at their press conference in Hawaii for their Hawaii based series ranging from $79.00 all the way up to an expected $699.00. On top of focusing on graphics this time, AMD is adding a new technology called True Audio – the result of 25 years of audio research on the brain. Unfortunately this feature will only be launched on their last card to yet to be released, the R9 290 (Name is not officially announced yet). AMD claim’s that the R9 290X will be the fastest chip that they’ve ever launched and it is expected to be significantly cheaper than NVDIA’s Titan with the possibility of better performance. Although it may not offer the performance of the Titan, it is expected to be on par and much more affordable than Titan’s $1000 price tag. Some rumors are even suggesting a $699.00 price tag.

With AMD’s foot in every next generation console, AMD has potential to increase their market share over NVDIA. AMD being in the PS4 and Xbox One will not only allow AMD to demonstrate the performance of their new technology, but also allow game developers to focus on optimizing their game’s performance with AMD’s APU’s and Graphic Cards. If game developers were to start using AMD as their foundation this could allow their graphics to have an advantage over their competitor NVDIA while running the same games. All in all, this puts AMD in a more competitive state and in the right position for future growth.

This Week is All AMD

I have been long on AMD for over a year and I am confident that this is the week where things are all going to be placed into proper order. I based my investment on the rumors of the PS4 & Xbox One as well as all the progress their APUs and graphics chips have made. On the 17^th, AMD will be announcing their earnings and guidance and as well as their first profit in a long time. 5 years ago AMD was neck-and-neck with Intel at a near 50/50 market share but over the use lost due to Intel’s superior chip technology. In November of 2012 AMD has struck rock bottom, reflecting a price of $1.81 and after rising to up to the $4.00 range the stock has been trading rather steady for the last several months. The new consoles are going to be a large portion of this quarter’s earnings announcement but is only the start of bringing AMD back to life by the advantageous position it brings them. AMD is positioning itself for incredible growth.

Stay tuned for more news on AMD this week as I’ll be covering their Server, APU and graphics technology & growth over the next few days ahead of earnings.