Advanced Micro Devices (AMD, Financial) saw a solid share price jump of 4.4% on Monday, followed by a 5.82% drop on Tuesday. The volatility speaks to investors' hesitation when it comes to increasing the stock's valuation multiples, but overall, Wall Street insiders and investors continue to expect great things from the company in 2022.
The Santa Clara, California-based semiconductor company does business in two segments: "Computing and Graphics" and "Enterprise, Embedded and Semi-Custom." Its product offerings include x86 microprocessors as an accelerated processing unit, chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs and development services, as well as server and embedded processors and semi-custom System-on-Chip (SoC) products, development services and technology for game consoles.
On Tuesday, the stock's drop came on the heels of its 2022 Product Premiere Livestream presentation. In it, the company’s President and CEO, Dr. Lisa Su, unveiled a collection of new products “that deliver leadership productivity, content creation, and gaming experiences." Included were a new line of central processors for laptops, including models designed to win marketshare from Intel Corp INTC.O in the corporate PC sector.
While some were unimpressed that the company isn't growing even faster than its current breakneck speed, that seems to just be the typical growing pains when it comes to growth stocks that are seeing their valuation multiples rise.
“Consider that over the last five years, AMD has grown its annual revenue by more than three times, grown its annual free cash flow from $4 million to nearly $3 billion, and pivoted from an annual net loss of nearly $500 million to a nearly $4 billion annual net profit,” noted Rich Smith of The Motley Fool. “With the stock trading at a price-earnings ratio of 43 and analysts forecasting that the company's earnings will grow at a nearly 40% annualized rate over the next five years, AMD actually looks quite fairly priced to me right now. This attractive valuation outweighs any potential concerns about the timetables for new product launches, which is why I view AMD's Tuesday sell-off as a buying opportunity.”
During the livestream, Dr. Su highlighted over 30 new AMD products, including the following:
- 20 new AMD Ryzen™ 6000 Series processors with the most powerful on-chip graphics available for notebook PCs1.
- Three new AMD Radeon™ RX 6000S Series GPUs optimized for thin-and-light gaming laptops.
- Five new AMD Radeon RX 6000M Series GPUs for premium gaming laptops.
- The new Radeon RX 6500 XT and Radeon RX 6400 desktop graphics cards for incredible 1080p gaming.
- Updated AMD smart technologies designed to boost performance and extend battery life on AMD Advantage™ laptops.
- The forthcoming AMD Software: Adrenalin Edition™ application featuring the new AMD Radeon Super Resolution (RSR) driver-based spatial upscaling technology.
The livestream also introduced the Ryzen 7 5800X3D desktop processor, the industry’s first consumer PC processor to feature 3D-stacked chiplets to deliver a significant increase in gaming performance. Dr. Su also shared a preview of Advanced Micro Device's upcoming Ryzen 7000 Series desktop processor planned to launch in the second half of 2022 based on the next-generation 5nm “Zen 4” CPU core and the new Socket AM5 platform, which features an LGA socket and includes support for PCI-Express® 5.0 and DDR5 memory.
The company said in a release that it expects over 200 new premium AMD-powered laptops for consumers, gamers and professionals to be available from leading PC providers in 2022, including over 20 new AMD Advantage laptops designed to deliver best-in-class gaming experiences on the go.
