Home / Business / AMD has gained the trust of Wall Street, and the stock shows the results

AMD has gained the trust of Wall Street, and the stock shows the results

Advanced Micro Devices Inc. – and Chief Executive Lisa Su – demonstrated on Tuesday how credible they have become on Wall Street – for a company that lacked that trust for years.


AMD, -4.61%

reported fourth quarter revenue and outlook for the first quarter, which was slightly below expectations on Tuesday, mainly due to excessive inventory levels in graphics chips. This would usually be a recipe for a sharp decline in chip maker volatile stocks, which started this week following a sales warning from rival Nvidia Corp. was hit.

NVDA, -4.64%


However, AMD's shares rose 9.1

% at its extended session on Tuesday as investors saw full-year single-digit single-digit growth for full-year 2019, with a projected sales decline of approximately 24% in the first quarter. Investors are clearly banking on the company's next generation of PCs and data center / server chips, in particular the higher-margin Epyc chips for servers coming on the market in the second half of 2019.

Investors would not have put so much faith in this company AMD before, as the paltry half-sibling to Intel Corp.

INTC, -0.36%

INTC, -0.36%

which licenses the Intel x86 technology but competes directly against the chip giant, constantly promised big profits at the door and failed to get through. Su is now in her fourth year as CEO and her team has earned this new respect by launching competitive products without the execution issues that have plagued the company in the past.

Su won this credibility with AMD's 2018 overall performance The biggest gain and revenue from AMD in seven years while reentering the server market and attempting to challenge Nvidia in gambling. When Su predicted better growth in 2019 than analysts expected – analysts had expected growth of around 6.4% in 2019 for 2019, according to FactSet, despite a weak first-quarter outlook, Wall Street believes.

See also: AMD is the most volatile stock on Wall Street in 2019.

Nevertheless, there is a risk that the big second half will be too strong, especially if some companies talk about it slowing the data center as AMD pushes into this market. Last week, Intel said data center chip sales would be in the low single-digit range this quarter. And on Monday, Nvidia surprised investors with the warning that Q4 sales would be about $ 500 million below expectations due to slower video card sales in both the gaming and data center markets.

These two companies, along with other chipmakers, are also looking for a stronger second half of 2019, giving some credibility to AMD's view. Some analysts asked for expected high growth in the second half of the year, and Su noted that the second half of the year would be easier to compare after selling no crypto currency chips in the past two quarters.

"As we enter the second half of the year, we expect to fully exploit the entire 7nm portfolio," said Su. "And so we would see a stronger emphasis in the second half. So we see sequential growth in the second quarter, but stronger in the second half of the year.

Opinion: This part of Nvidia's warning is likely to scare investors the most.

Su and Co. Made a Significant Contribution AMD is gaining back on Wall Street, but there are many potential economic factors that could shake investors' confidence in their forecasts. AMD and many other chip companies are using new products to overcome macroeconomic problems in the second half of the year.

For years, analysts and investors have not relied on AMD to overcome these macrofactors and execute them properly to meet their forecast. AMD shares on Tuesday afternoon show that it really is a new era for the company with a responsible, responsible CEO.

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