Advanced Micro Devices Share Forecast February 2022 – Time to Buy AMD?
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Shares of American multinational semiconductor company Advanced Micro Devices (NASDAQ: AMD) are in the green today, after closing at $122.76 as of February 2nd (19:59 EST). AMD shares are up after the company reported yet another quarter of incredible performance. The company posted 68% growth for the full-year period and posted 49% year-over-year revenue growth in Q4 2021. Its management is expecting to produce sales worth $21.5 billion in 2022.
Advanced Micro Devices – Technical Analysis
AMD’s financial statement indicates a market cap of $148.246 billion with total assets worth $12.419 billion. Revenue for 2021 was at $16.43 billion with a profit margin of 19.24% compared to $6.73 billion in 2020.
Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(80.53), Williams Percent Range (14)(−44.13), Bull Bear Power(12.88) and Ultimate Oscillator (7, 14, 28)(46.11) are neutral. Moving averages such as Exponential Moving Average (20)(122.84), Simple Moving Average (20)(124.08), Exponential Moving Average (30)(126.84), Simple Moving Average (30)(131.85) and Exponential Moving Average (50)(129.89) are indicating a sell action.
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Recent Developments
AMD’s future looked tenuous a decade ago. It had parted ways with chip manufacturing division Globalfounderies when it was Fraught with financial trouble during the Great Recession of 2008-2009. It focused on doubling down on semiconductor development which is a monumental task given Intel’s dominance. Over time AMD made headway in personal computing and data centres, taking away market share from Intel.
It is a recent earnings report released on February 1st that beat analyst expectations and provided strong guidance for the upcoming quarter and year. It indicated that the company’s data centre revenue doubled year over year (YOY) for the fourth quarter. This is driven by the massive adoption of Milan, AMD’s third-generation server processor. AMD’s total revenue consists of 20% from data centers. Additionally, the company guided single-digit sequential growth in gaming console systems.
A company needs to be in a constant innovation race in the semiconductor industry. Rival Intel has had problems bringing new generations of chips to market. It delayed its 10nm chip technology repeatedly, giving AMD a chance to make up ground. The company capitalized on this opportunity by bringing 7nm chip technology to market in late 2020. Currently, Intel doesn’t have an equivalent product on the market.
AMD shares are now up 1,670% over the last 10-year stretch. Management expects sales to increase another 31% and for-profit margins to expand in 2022. AMD is getting ready to challenge Intel on a brand new front with its acquisition of Xilinx. The deal just got approval from regulators and should be complete by the end of March 2022. The company hasn’t included Xilinx, a business also growing by a double-digit percentage, in its growth outlook. AMD looks to access new markets like industrial equipment, networking infrastructure, and automotive technology via Xilinx.
Should You Buy AMD Shares?
AMD shares are trading with a premium price tag. Many investors tend to shy away from stocks like AMD given that the semiconductor industry is a historically cyclical one. This market experiences periods of booming sales which are subsequently followed by a sales drought, rinse and repeat. Currently, the world is in the midst of a chip shortage and eventually supply and demand will balance out. However, what makes AMD a good long-term investment is its new focus on chip research and development. Considering this, you can add AMD shares to your portfolio.