AMD, Which Lost Over $2.8 Billion In 5 Years, Takes a Hit After New Report (arstechnica.com)

An anonymous reader quotes a report from Ars Technica: On Monday, AMD's stock price plunged nearly 9 percent after a report by Morgan Stanley, a major investment bank, which found that "microprocessor momentum" has slowed. According to CNBC, a new report by analyst Joseph Moore found that "cryptocurrency mining driven sales for AMD's graphics chips will decline by 50 percent next year or a $250 million decline in revenue. He also forecasts video game console demand will decline by 5.5 percent in 2018." As per AMD's own SEC filings, the company lost over $2.8 billion from 2012 through 2016. However, new releases from AMD suggest that it may be on something of a resurgent track. As Ars reported last month, AMD's Ryzen and Threadripper processors re-established AMD's chips as competitive with Intel's.

Comments

Undervalued

[sexconker]

I'm terrible at picking stocks. But I'd say buy now.

AMD had a fantastic Q3 and predicted a slower Q4 (as expected), and the stock has fallen a ton in the past few days. It really makes no sense.
AMD also has fantastic products out now with more to come.

Re:Undervalued

[Osgeld]

the stock market is mostly driven by lemming mentality, emotion and knee jerk reactions

Re:Undervalued

[Kjella]

AMD had a fantastic Q3 and predicted a slower Q4 (as expected), and the stock has fallen a ton in the past few days. It really makes no sense.

Well, the stock has gone from $2 to almost $15 and then slumped back to $11 so it's not like the market has really lost faith but the expectations for AMDs recovery were maybe exaggerated. Right now AMD is probably billing a lot of semi-custom revenue for SoC that go into the launch of Xbox One X and the PS4 Pro was last year, next year will be a slow year. Also Q3 is generally when Microsoft/Sony buy chips for their Christmas sales. Ryzen and TR is doing well in some markets, but Intel has pretty aggressively slashed prices to close the launch gap and enterprise customers take a long time to trust AMD EPYC servers.

Vega is an okay response to Pascal as a GPU but it's better as a crypto-mining card, the question is how quickly does the Ethereum market move to FGPA/ASIC custom chips like Bitcoin has, will the ICO bubble pop and so there's a lot of risk there. And don't forget that AMD has sold off and licensed a ton of assets and got a pretty high debt burden. And the PC market is in a general slump, nothing their fault but it doesn't help. With Zen they've put enough product on the table that they seem to be out of immediate danger and breaking even, but I still think they have a long way to go towards stable growth and profit.

Re:Undervalued

[bobbied]

the stock market is mostly driven by lemming mentality, emotion and knee jerk reactions

Actually, not really. Where this is true for the "retail" market and individual investors who think they can trade stocks on hunches like they play poker and don't know what they are actually doing, the majority of stock trading is driven by program trading.

The people who trade on emotion, get slaughtered by the big program traders who can do all sorts of clever tricks by looking at data your average retail investor cannot afford to get. Even if you *could* afford to get the data, the big program traders would beat you to the trade because they pay big bucks to be physically closer and being milliseconds behind will cost you.

Imagine being able to see all the queued up orders for a stock and having enough money to manipulate the stock price in the short term... Then you can sell short, trigger a stack of stop loss limit orders which are near the current price turning them into market orders and collect some cheap shares to cover your short and make a tidy profit with nearly zero risk. Doesn't happen all the time, but you just turn the computers on and let them watch for it while you play golf and rack in the cash when it happens. Of course, there are other ways to make money doing stuff like this...

Re:Undervalued

[rahvin112]

The Jump from $2 to $15 priced in all the growth you're talking about. In fact it priced in more growth assumptions. If AMD doesn't hit all the targets that got priced in (look to the consensus earning estimates made last quarter that covers the next year) the price is going to fall.

EPYC is still on full allocation to cloud providers and OEMs only. It's impossible to buy on the individual market. This makes it apparent that it's popular but how popular we won't know until AMD tells us how many they sold, it could be simply that their production runs have not been large enough to tackle demand and that's a scary though considering we a more than a full quarter away from when production started. I'm not encouraged by the fact that Supermicro hasn't bothered finalizing their single core motherboard designs. I'm willing to bet they are having production issues and they haven't sold anywhere near what everyone thought they would. For example if the 0.08cent per share earnings that was the consensus for 4Q (I'm going off memory here not verifying, my intent is the scale not the exact figure) ends up being half that you'll see the price fall to $7.

Personally I believe AMD is missing a critical envelope here in the individual server market where I think they would do relatively decent on the linux server market. They trying to ensure Cloud computing and OEM's get first pick. I understand why they did this, they wanted the companies that will absolutely love their high core counts and expanded PCIe bus to get first shot and it helps the cloud providers are happy to buy thousands of these at a time and can fully utilize them right out of the door because their clouds run Linux (ie they won't be waiting on Microsoft to update the windows kernel). But if Google, Facebook and Rackspace get all the production for the next 6 months there never will be an individual market for these chips where they could build some lasting execution. The cloud companies are happy to jump around and buy from anyone who can provide the most compute per dollar per watt. You don't get long term purchases in that market, where in the individual market you'll build brand awareness and are far more likely to get return purchases. The PCIe advantage in particular I believe could draw off a significant number of Intel sales in the individual server market and benefit AMD for years to come.

In the end all that's going to matter is can AMD remain competitive with Intel and avoid missteps while continuing to execute. They've had bad management IMO the last couple decades, pursuing fads with no long term vision and significantly overpaying their executives. Only by cleaning out the MBA's and stocking management with engineering experience and a desire to compete do they stand a chance here. They need to start executing and planning to remain competitive with Intel. Ultimately this will decide if Bankruptcy eventually takes them as that $2 stock price portended but Ryzen barely avoided.

Re:Undervalued

[nateman1352]

Yeah the stock market is full of rampant speculation, but I think Wall Street is probably has it right. I know I will be modded down for pointing this out but Coffee Lake is sold out everywhere, Ryzen is not. Although Ryzen has made AMD competitive, most PC builders are still buying Intel.

Given that it took Intel 8 months to add Coffee Lake in between Kaby Lake and Cannon Lake and it took AMD 5 years to develop Ryzen... the situation that happened between 2003-2006 when AMD was the technically superior choice is unlikely to ever happen again. The good news is that Ryzen has made AMD just slightly profitable again, so at least they are no longer in danger of imminent bankruptcy.

Re:Undervalued

[war4peace]

More data to back that up:

Steam Hardware and Software Survey: http://store.steampowered.com/...
Currently showing data between April 2016 and September 2017. Includes the launch dates of AMD's latest major CPU and GPU products. AMD's GPU% dropped from 25.4% to 17.1% during the period. In the CPU Graph, AMD dropped from 23.3% to 16.53%.

GPU detailed data here: http://store.steampowered.com/...
CPU detailed data here: http://store.steampowered.com/...

Reasons for this:
- Vega was a total flop.
- Ryzen was hit by the a rare Linux compile bug (some source here: https://hothardware.com/news/a...).
- Ryzen OC potential is modest.
- Threadripper is awesome but very, very niche and not recommended for gaming due to lower IPC and frequency compared to its Intel counterpart.
- And most importantly, AMD was the underdog for way too long. It's like getting back up in the boxing ring after most spectators have left for home.

Re:Undervalued

[war4peace]

R7 1700 (which I own) has 3.0 GHz base frequency, 3.7 GHz boost frequency and max 3.75 GHz boost frequency with XFR.
i7 6800K (which I also own) has 3.4 GHz base frequency, 3.6 GHz boost frequency and max 3.8 GHz boost frequency with TBM 3.0.

My R7 1700 reached 3.9 GHz stable after much tinkering (900 MHz above base), I get no boot at any frequency above that.
My 6800K reached 4.625 GHz stable after about 30 minutes of UEFI configuration, and at 4.75 GHz it crashes in synthetic tests but works in daily use, including Blender. Boots to UEFI but doesn't finish OS boot-up at 4.875 GHz.

I only talked about OC potential, the fact that "it's cheaper" only has so much relevance.

Dropped the ball on mobile

[Eravnrekaree]

Both AMD and Intel dropped the ball on getting x86 onto smartphones, despite the benefits in compatibility between desktops and phones it could have provided. It certainly would have been possible.

Desktops and laptops are still going to remain the top end of the market, and the choice for doing real work, also gaming, since the form factor allows for expansion and ventilation to support more powerful systems. We are still far away from being able to have the CPU power for real, lifelike gaming, such as real time ray tracing. So there is plenty to drive the need for faster CPUs. Desktop systems should still be for people who want a lot of expansion including a larger case, this is the niche it can fill. The idea that by offering compact desktop cases sort of runs against why someone would want a desktop system and weakens what differentiates it from a laptop. Why buy a compact desktop system when it offers no expansion advantage over a laptop? I see many manufacturers offering compact desktop systems, when really I doubt it will help.

Mobile and desktop systems really fill two different market niches so its a mistaken idea that the mobile can replace a desktop system. Working on a spreadsheet or taxes on a 3" screen? No thanks.

Re:Dropped the ball on mobile

[jezwel]

I recently tested the Samsung Note 8 on the Dex dock with a large 4k monitor, + USB kb & mouse. Currently the Dex dock does not support >1080p, even though the HDMI interface is v2.0. Other than that, I could use native Android apps for a bunch of basic work stuff, and where I needed x86 apps I ran a virtual desktop. Worked perfectly fine as a PC replacement.
We'll be looking at this more in future as the potential to move to a single mobile device with a dock at work and home could save significant $$$ over even a normal desktop.

Seems like..

[Z80a]

Someone want to catch the Raven ridge train, so it's knocking down AMD a few notches to buy stock.