Advanced Micro Devices (AMD)

In her top 10. It's doing very well in GPUs for small language models, less so for large ones. It's taken huge share from Intel and now has 40% of the CPU market. AMD chips requires a lot less memory. 

They held a financial analysts meeting yesterday and shares soared 9%. Shares caught fire last month when they announced a massive deal with OpenAI. The CEO convinced analysts, noting that AMD took market share of CPUs from Intel and GPUs from Nvidia. Their data centre revenue has risen from $2 billion in 2020 to $16 billion this year. CEO expects the total data centre market to grow 40% compounded annually. AMD is the closest rival to Nvidia. The CEO announced surprising growth targets: 35% revenue compound annual growth for 3-5 years,from 54% this to  55-58% gross margins in coming years, operating margins 35% in coming years, and EPS $20 in the future vs. under $4 this year. These targets are credible, can execute. You can still buy shares at these levels.

 It reports Tuesday. Is a long-term outperformer. Not for the squeamish, though.

Deal with OpenAI, which leads to discussions of circular economics -- does a deal with a promise of business in the future. The deal itself propelled the stock quite a bit higher, but he's not sure it deserves the valuation bump. The effect is quite dilutive. In third place behind NVDA and AVGO.

Challenging couple of years, recently took off (mostly because of the OpenAI deal). Before that, the 200-day MA was falling. 46x forward PE for ~30% growth (which has really taken off). Many analysts have raised estimates.

He owns NVDA instead. It's cheaper, and he likes it more.

His eggs are in the baskets of NVDA and AVGO. Stock popped when OpenAI put in another $10M (NVDA had put $100M into OpenAI, and then OpenAI turned around and used $10M of that). He'd hold on.

Good question. The answer is that it doesn't matter, because the market response is extraordinary for these things. Anybody's evaluation of it doesn't tell you why this stock should be up 25-30% in a day for such a large company. 

So the analysis doesn't matter. He's more interested in the market response, which tells you about the speculative nature of the market we're now in. And it could last days, months, maybe years. AI is still very early, and everybody gets really excited about it. 

There's enough room for Nvidia and AMD in this market. Fine CEO.

Today, shares are down because they could not include the revenue from the MI308 in the upcoming quarter, and the street didn't like that. That said, the semis are coming back and this momentum will continue to the end of the year.

Still carving out its lane in AI chips. Q2 earnings beat by a hair. Data centre revenue up 80% YOY. Gaming segment remains soft. 8/10 on fundamentals. Chip momentum is real. Consistent upward trend since April selloff.

Prefers, and owns, NVDA. But things could change.

#2 to NVDA. The go-to name if you don't want to own an NVDA chip. Companies need backup, and this name can provide it. No dividend.

Likes to watch the semiconductors as an indicator for economic expectations. This group has led the rally over the last number of years, regularly checking back to the 200-week MA (as in March/April of this year). Rallied nicely since then. NVDA is obviously the leader and making new all-time highs. Semi index in the US has not made a new high, and that's a little something to think about especially when the market it. Its RSI has come off the deep low, so there's no issue in the short-term.

This name is performing very well. Semis are giving good messaging right now. He'd really love to see the semiconductor index make a new high, and that's the caveat. This one will pick up market share, but he'd prefer to be with the leader NVDA.