Advanced Micro Devices Share Price Forecast December 2021 – Time to Buy AMD?
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Shares of American multinational semiconductor company Advanced Micro Devices or AMD (NASDAQ: AMD) are in the green today, after closing at $144.85 as of December 7th (22:58 EST). While AMD is known mostly for supplying its chips to the personal computer (PC), data centre, and gaming console markets, it has started to gain importance in the EV market as well. Many believe that AMD presents a good buying opportunity.
Advanced Micro Devices – Technical Analysis
According to the financial statement, Advanced Micro Devices has a market cap of $174.922 billion with total assets worth $11.153 billion. AMD’s revenue for 2020 was at $9.76 billion with a profit margin of 25.50% compared to $6.73 billion in 2019.
Oscillators for AMD such as Relative Strength Index (14)(51.18), Stochastic %K (14, 3, 3)(21.70) and Commodity Channel Index (20)(−77.47) are neutral. Moving averages such as Exponential Moving Average (30)(142.26), Simple Moving Average (30)(143.35), Exponential Moving Average (50)(134.35), Simple Moving Average (50)(129.57) and Exponential Moving Average (100)(121.06) are indicating a buy action.
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Recent Developments
AMD’s growth has been primarily bolstered by the robust demand for its chips. This market is expected keep driving AMD’s growth up, with other emerging catalysts that could complement its existing growth drivers. For instance, the company has agreed to provide the building blocks of Meta Platforms’ (NASDAQ:FB) metaverse.
Apart from this, the chipmaker is also entering the EV market. Reports indicate that Tesla will AMD’s chips to power the in-car infotainment system in its Model Y lineup in China. AMD chips already exist inside the car maker’s infotainment systems of the Model S and Model X vehicles. AMD’s addressable market in the EV space will increase as a result of the addition of new factories and the potential increase in Tesla’s production capacity.
A strong relationship between AMD and Tesla could encourage other automakers to come to AMD as well. According to CEO Lisa Su in its October earnings conference call, the company is gaining ground and expanding its automotive design wins. This proves that AMD’s earnings will grow at least at an annual rate of 35% for the next five years according to many analysts.
Should You Buy AMD Shares?
Investors should look at AMD’s partnership with Tesla that could present a terrific revenue opportunity. With Tesla expected to reach an annualized production rate of a million vehicles by the end of the third quarter from just two factories in California and Shanghai, it is well on its way to producing 1 million vehicles yearly. Tesla is also on the move to open two more factories in Texas and Berlin.
AMD is likely to generate more revenue from its automotive segment as AMD’s chips now being deployed in another Tesla vehicle. More automakers will eventually come to AMD thanks to its wide range of applications ranging from a digital cockpit and artificial intelligence-enabled features such as driver alertness monitoring and natural-language voice control.
AMD’s automotive portfolio is expected to be worth billions in the long run. For instance, the automotive infotainment market, on the other hand, could jump from $25 billion in revenue last year to nearly $43 billion by 2027. The digital cockpit market is also expected to be worth $36 billion by 2025.
This could be another catalyst for AMD in the long-run, adding to the already-impressive growth that it is expected to deliver. While Analysts estimate that AMD’s earnings will increase at an annual pace of 35%, AMD can perform even better in the next few years thanks to newer markets.
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