My view on AMD
$Advanced Micro Devices(AMD.US$ AMD latest earning is indeed not impressive but is not unexpected. MI300X/A has just been pushed out 4Q 2023. The software part (ROCm) is definitely not as mature as Nvidia’s CUDA. Potential AI customers are still evaluating. Only some placed orders. Most of the purchase still goes to Nvidia. My view is that it will take Q2 2024 earliest to see good numbers from AMD ER. The reason for the current high share price is all about
(1) the huge AI demand and
(2) AMD's potential to take some small share from the super big AI market. If AI crashes, all will, including Nvidia.
AI market is huge, very huge! If I remember correctly, Meta alone intend to operate 600k of H100 equivalent GPU. If each H100 cost around USD40k, total would be approx 24 billion. Of course, there are many other big players such as Microsoft, Oracle etc. With such as big market, you can afford to have a few AI chip players.
A good indicator for (1) AI demand is to monitor Nvidia’s ER. As long as Nvidia AI revenue continues to stay at stratospheric level, (1) is intact.
For (2), it is all about having the confidence that AMD has the ability to deliver her solution (MI300x and ROCm). Nothing else. If one purely looks at past figures or even latest ER to project what it is going to come, it is too late. By the time big companies already bought AMD’s AI solution and the revenue reflected in AMD ER, price will not be what it is now.
Some say it is a bubble, I disagree because it has real world applications even now and potentially much more application going forward. If companies such as Meta, Tesla, Microsoft have already spent billions for their service offerings, they will not let it down die in one or two years time. At most I would say it is way too overhyped.
I may be wrong and I may lose a lot of money. Who knows but I put money where my mouth is. This is for your information, not to paint rosy picture about AMD nor spreading FUD (Fear, Uncertainty and Doubt) about AMD by some of the guys here with ill-intent for personal interest.
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digimonX : A few people in this forum stated that AMD's recent quarterly earnings was below expectations. Actually, the results itself were inline with expectations. The problematic part was the guidance for the next quarter, which to be clear, is also not that far from expectations. AMD's stock price has run hot up till earnings day & anything that is below, although slightly could trigger a sell-off.
The thing that many people are missing is that AMD's business is made up of several segments. In 2023, the Client (PC CPU) was for the most part on a slump due to overpurchasing by corporations & end customers during covid years. The gaming & semi-custom business were also on a downturn. Although data centre segment is growing rapidly, the overall balancing effect has caused a rather muted growth.
Being an Asian, I think Lisa tends to give a lower initial number & revising it along the way to keep the excitement high. So, last quarter, she said to expect $400 million for AI GPU sales in Q4 2023. AMD exceeded that. She also mentioned to expect $2b for AI GPU sales in 2024. She has since revised it to $3.5b. I believe she will keep increasing this number quarter over quarter. We may see $6b - $7b for 2024. I think the limiting factor here is TSMC's capacity. AMD (& nVidia for that matter) is selling every AI GPU that it can manufacture.
The PC segment is expected to recover in coming months. So, we will also see the Client segment's numbers improving. Unfortunately, gaming & semi-custom will likely to continue to drag till at least H1 2024. So, the 1st half of 2024 will likely still be bumpy but results are expected to be good in H2 2024. Will not be surprised to see all-time-high at the end of the year (assuming no external shocks).
digimonX : BTW, I also want to congratulate you for buying & holding, thereby having a good size paper profit. There are many gamblers in this place, screaming non-sensical stuff day after day.
macfan28OP digimonX: This is not my first round of investment with AMD. In fact, the attached paper profit is just 60% of my current AMD investment. I have another 40% in AMD elsewhere.
I invested in AMD since 2017 when their 1st Gen Ryzen was released. Accumulating shares from USD12 onwards. Sold at USD142 in 2021 and that was my first round of exit. Then, there were a lot of people saying exactly the same thing now. Intel was easily 10x AMD market capital. There was no way Intel would lose. Intel CPU was simply the best. They were arguing using Intel vs AMD finance, market share, profit (just like now AMD vs Nvidia). Ryzen was not bringing in money. Low sales. AMD PE was crazy high. Of course right? Ryzen was new and had just been rolled out. It was playing catch up! What do we expect? Overnight dethroning of Intel/Nvidia?
Fast forward today, AMD is a formidable CPU player. Its CPU tech is now better than Intel. If not for Intel strong partner channels, Intel would be losing much more CPU market share than it is now.
Here I am again, after studying Nvidia and AMD AI solutions, I believe AMD’s solution will be as good. It just takes some time. AI market is big enough for more than one player (just like CPU market then shared by AMD and Intel). I don’t look at just the financial figures alone. AMD’s ability to product excellent products is the key (AMD CEO too) and accumulating now before price rises further is what makes sense to me.
I can be wrong and I am not asking anyone to follow me. Do one’s own due diligence before putting down the money. There is no short cut.
One should never invest without knowing the stock. He can be badly manipulated by fear mongers or rosy painters :)
104395530 : Your views are very reasonable, unbiased, and smart. I absolutely agree that AI isnt a bubble, and that it is also very overhyped. The market will continue to grow, but I believe that the biggest limiting factor of AI is the speed of its progress. Even as billions of dollars are poured into r&d, we are still only at the very beginning stages of the development of AI. While it can currently do a lot of incredible things, and the biggest improvements compared to before the AI hype is the speed and accuracy of the outputs, it lacks in generalised tasks due to the nature of AI. This is my subjective opinion, but I hope that the industry would push more to the direction of AGI, which is somewhat underlooked compared to the generation tools the market is currently overhyped about.
I dont have a good grasp on what the future holds, and how the market will pan out, but I believe that AI is neither the bubble gamblers love, nor the rocket to mars that people want.
macfan28OP 104395530: Isn’t AGI what Meta wants to build and investing in?
digimonX macfan28OP: I invested in AMD before the 1st gen Ryzen CPU was out. I have been holding most of this time. 2022 was a painful year for me but now we are near all time high.
We went thru the same period when there were a lot of AMD bashings because "Intel was invincible". People forgot Intel had & still has many issues internally. It is very difficult to steer this ship. Some of Intel's ex-CEOs were really not that good.
However, I do think nVidia is different. The CEO is very determined & the team also executes very well. So, the game is much tougher now against nVidia. The bigger picture though, is that the AI pie is so big that many players can gain, be it from revenue perspective or market share perspective. So, as long as AMD continues to deliver on its roadmap, it should continue to do well.
Good luck! (to me too)
macfan28OP digimonX: Ah! Found someone who thinks the same!
Yes Nvidia is no slouch and definitely way more
competent than Intel!
It will definitely be a tough fight and AMD might never win! Whatever it is, market is big enough and even if AMD takes a small pie, it is good enough.
Wish us luck yeah? Cheers!