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Home / Business / Semiconductors: Beware of the Fadeaway – NVIDIA Corporation (NASDAQ: NVDA)

Semiconductors: Beware of the Fadeaway – NVIDIA Corporation (NASDAQ: NVDA)



The Fadeaway Move

"Fadeaway" is a well-known, if quite difficult, game in basketball.

A fadeaway or fall-away in basketball is a jump that takes place when jumping backwards and backwards out of the basket. The goal is to make space between the shooter and the defender, making the shot much harder to block. The shooter must have a very good accuracy and use more force in a relatively short time. – Wikipedia

  Photo Result for Fadeaway Basketball

Michael Jordan was one of the most popular shooters of the FadeAway. Wilt Chamberlain, Patrick Ewing, James LeBron, Kobe Bryant, Hakeem Olajuwon, Dwyane Wade, Karl Malone and Larry Bird are some of the greatest of all times ("GOAT"), which are also known. It is no coincidence that those who have perfected the Fadeaway step are also the ones making up the GOAT list.

Similarly, in recent years, semiconductors have taken their fadeaway step to perfection and created more than enough space (also referred to as profit margins) between them (suppliers) and their "defenders" (customers), reducing the price of the stock much harder to "block" is.

Semiconductors have "played" so well in the last three years before Q4 / 2018 (ie 9/30 / 2015-9 / 30/2018):

  Total returns of semiconductor stocks over a 3-year period, 9 / 30 / 2015-9 / 30/2018

Some short observations: [19659010] 1. Nearly all leading names outperformed the overall market (S & P 500). Total returns of Nvidia Corp. (NVDA), Advanced Micro Devices Inc. (AMD), Micron Technology Inc. (MU), Taiwan Semiconductor Manufacturing Co., Ltd. (TSM), Texas Instruments Inc. (TXN), Broadcom Inc. (AVGO), and Intel Corp. (INTC) were much better than the SPDR® S & P 500 ETF (SPY).

Only Qualcomm Inc. (QCOM) and NXP Semiconductors NV (NXPI) lagged behind the index. We focused on these two companies (along with AVGO) in " Three Musketeers ", our latest article.

. 2 With the exception of INTC, all names that outperformed the SPY exceeded the technology benchmark – Invesco QQQ Trust (QQQ).

. 3 Four companies – NVDA, AMD, MU and TSM – outperformed the benchmark of iShares PHLX Semiconductor ETF (SOXX). However, this succeeded only the first three.

The three half-time periods (AMD, NVDA and MU) (in the last three years) that have outperformed most have been starring in some of our articles the last 15 months. That means:

If you have not thought that yet – we love semi-finished products. We believe that this is the past, present and future. It's hard (and honestly makes no sense) to argue here with growth and potential.

We like all three names – AMD, NVDA and MU – and we own all three.

Having said that, we like AMD better, mainly because we see it as a better choice from a risk / reward perspective, but also because we see a greater potential for AMD in an already shining kingdom to shine. In other words, it will be easier for AMD to beat and play than its main counterparts.

Source: Semis: It's not just who you want to play with, but how you want to play the game (Part I), March 14, 2018

In this two-part article, we focused on our favorite semester AMD, MU and NVDA.

At this point, you can (hopefully) understand why we hold this trio and why AMD is our sunshine.

] Just as the three tenors – the Spaniards Plácido Domingo and José Carreras – and the Italian Luciano Pavarotti – founded an incredible vocal group in the 1990s and early 2000s, we believe that the three Semis in the 2010s and in the USA make an incredible growth group 2020s.

No tears, no fears and one of them. O Sole Mio: AMD.

Source: Semis: It's not just who you want to play with, but how you want to play the game (Part II), March 16, 2018

As you can see, we were (already at the end of 2017; further details / evidence below) just right when picking AMD r preferred the 2017 semester as well as dumping from NVDA.

The same applies to the reversal of our long position in AMD into a short position just before Q4 / 2018. This short position was closed on in Q4 / 2018 and since then we have no position AMD. (Until this week, further details below.)

The Fadeaway Mode

Nevertheless, we remind you that "the shooter has very good accuracy and must use more force in a relatively short time."

Semis had the accuracy and strength, but now it seems like time and energy are running out for many of them.

Here is the same list of above companies since the beginning of the fourth quarter / 2018 and so far (closing prices) of 12/03/2014):



A brief note: only four names outperformed the overall (S & P 500), technology (QQQ, XLK, VGT, FDN, IYW) and / or semiconductor benchmark.

The overall returns of iShares PHLX Semiconductor (SOXX), SPDR® S & P 500 (SPY), and Invesco QQQ Trust (QQQ) Benchmark ETFs since January 1, 2010 are better than those of Taiwan Semiconductor Manufacturing Co. Ltd. , Micron Technology Inc., Qualcomm Inc., Advanced Micro Devices Inc. and Nvidia Corp.

Only Intel Corp., Broadcom Inc., NXP Semiconductors NV and Texas Instruments Inc. outperformed the benchmarks.

The "Fadeaway Mode" is even more impressive when we focus on the trio of NVDA, MU and AND.

Total Return – the last three years (until 13/03/2014)

The last three years have passed Nothing but the sky for the trio, even though we include the last very hard months.

AMD (TR of + 828%), NVDA (+ 431%), and MU (+ 241%) have lef For all other benchmarks, whether diversified (SPY, QQQ) or focused (SOXX, SMH): [19659036] iShares PHLX Semiconductor ETF (SOXX) + 114%

  • VanEck Vectors Semiconductor ETF (SMH) + 101% [19659038] SPDR® S & P 500 ETF (SPY) + 47%
  • Invesco QQQ Trust (QQQ) + 71%


  • Total Return – FY 2018

    However, if we look at ourselves in 2018, including the devastating fourth quarter, this is more of a mixed bag.

    While AMD Finished NVDA and MU will be less likely to remember 2018 as the year's best S & P 500 title of the year.

    Source: FactSet



    However, 2018 may not be considered as a whole. Since the last quarter was as different as in the three preceding quarters, this is followed by a split view from 2018 to and from the crucial date (October 1, 2018):

    • Total return from January 1, 2014 to October 10, 2018 [19659045] The "Golden Age" in which AMD (+ 206%), NVDA (+ 50%) and to a lesser extent MU (+ 10%) outperformed the leading ETFs of semiconductors (SOXX + 10%, SMH + 9% ) as well as the main indices (QQQ + 20%, SPY + 11%) after one mile.



      • Total return from 01.10.2014 to 13.03.2014

      Then came the 01.10.2014, and from this date things were no longer the same for the semi-finished products. Since then, it is a mirror image as in the first three quarters of 2018. NVDA (-42%), AMD (-26%) and MU (-14%) are far behind the semiconductor ETFs (SOXX flat, SMH -1 %) as well as the main indices (QQQ -5%, SPY -3%).



      We are clearly experiencing a true and significant trend. Now, the question arises as to what the future holds for this halftime, and we will try to find this out later in the article.

      Earlier Revenue and Other Financial Aspects

      First, it is important to consider only the NVDA has a market size that is nearly 50% larger than the market caps of MU and AMD combined.

      However, it is noticeable that the current trend for NVDA and MU and for AMD is trending downwards. In other words, the gap (in size) is shrinking, and we expect it to continue shrinking and going further.



      The amazing history of semi-finished products is beautifully illustrated by the chart below, showing the evolution of the trio's market caps over the last decade.

      Ten years ago, all three companies were tiny companies that hardly anyone looked at. At the peak of their rating (each in a single seat), the three companies were worth over $ 300 billion (!), With NVDA accounting for 2/3 of that.



      Since the current combined market capitalization is below the combined highs at over 40% (or about 60% three months ago), it may seem (some of you) as if these companies lost their "mojo ". However, we would not make such a generalization; At least not yet …

      Over the past two years, the MU has been in its own league doubling its average quarterly income from 2016 to 2018. However, the MU's golden age is over now, and its expected to be over Flagship DRAM and NAND flash products will steadily decline over the foreseeable future.

      That's why Wells Fargo (WFC) analysts downgraded their expectations regarding Micron DRAM pricing. WFC analysts now expect sales of only $ 22.58 billion (down $ 29.9 billion, -25%!) And earnings per share of $ 5.26 (down $ 5.87 million -10%). ) in CY19.

      Risks include very volatile prices for DRAM and NAND Flash, the need for relatively high capital investment, and large fluctuations in Micron's return on profits that we have seen in the past and which we believe will persist in the future become.

      Still, WFC MU still rates "outperforming" a $ 50 PT, as analysts at the bank still believe that "long-term positive, secular demand drivers remain intact".

      The big shock here is Nvidia, a company that has experienced tremendous growth over the past five years, fourth quarter of 2018. On 1/28/2019, Nvidia was embarrassed by its forecast for Q4 / 2018 due to weaker games – and data center sales significantly reduced.

      Possibly one learns from Apple (AAPL), according to experience, Nvidia has prepared the market for the worst and then – if the actual numbers (February 14) – both companies pleased investors with a more optimistic forecast for the coming years.

      In the case of Nvidia, the company continued to target flat to slightly declining sales in the current fiscal year 2020, still better than the market. Bärischer consensus (after the 28.01.1999, earlier "preparation") with a decrease of 5%.

      The fourth quarter was an exceptional, unusually turbulent and disappointing quarter. Looking to the future, we are confident in our strategies and growth drivers. – Jensen Huang, CEO of Nvidia

      Earlier this week, the company announced its $ 6.9 billion acquisition of Mellanox (MLNX). While Nvidia expects the deal to lead directly to its non-GAAP gross profit margin (EPS and FCF) after the agreement, we do not believe that this acquisition will move the needle too much.

      Looking At Latest Data for Fiscal Year 2008:

      • Turnover: NVDA: $ 11.72 billion, MLNX: $ 1.09 billion (9.3% increase assuming zero cannibalization)

        • 19659037] Net Income: NVDA: $ 4.14 billion, MLNX: $ 134.26 million (importing) an increase of 3.2%, assuming zero cannibalization)

        So, even if we have a " Sum of all parts (with zero cannibalization) based on last year's numbers (and we do not think NVDA could recur) (…) this deal is not a deciding factor.

        While Nvidia will likely be the better buyer of Mellanox – unlike other interested parties like Microsoft (MSFT), Intel, Xilinx (XLNX), or IBM (IBM) – that does not mean that Mellanox will be able to To create miracles for Nvidia. A nice, profitable supplement? For sure. A game changer? Certainly not!

        Also for Q1 / 2019 AMD issued a downward forecast. The company generates sales of only $ 1.2 to $ 1.3 billion (compared to a market consensus of $ 1.47 billion). (Large crypto-currency mining inventory must be cleared.)

        Overall, everyone speaks / plays the numbers in 2019 vs. 2018.



        Micron benefited from phenomenal margins (more about it) translated into unbelievable EBITDA. To put it in the right context, MU's recent quarterly sales were 3.6x and 5.6x higher than those of NVDA and AMD. At the same time, MU EBITDA is 12.4x and 68.5x higher than that of NVDA and AMD.



        • Operating income (quarterly)

        The same picture (as the EBITDA) is drawn in respect of the operating result. MU lives (i, e, lived) on its own (profitable) planet.

        Note the sharp decline in Nvidia's operating income, which has returned it to a level that the company only saw more than five years ago.





        • If you look at the charts below and the previous charts, you can not wonder why AMD is a company that is building its top-line very well and has very strong margins (read more) Below) – can not translate its growth into improved profitability.

          When it comes to the end result, AMD still has a long way to go.



          • Operating Margin (Quarterly)

          We talked about Micron Ränder's unreal operating business – and there you have it. While Nvidia approached the 40% mark not so long ago, MU has made more than 40% (and sometimes 50%!) In the last 18 months. That's not less than crazy.

          If you're wondering why it's hard for AMD to turn (revenue) growth into profit – here's your answer. Excessive costs / expenditures account for most of the growth and do not give enough exposure to shareholders.



          • Profit margin (quarterly)

          Profit margins are even more overwhelming than operating margins. Micron can almost change this ratio in the ratio 1: 1. Any $ 1 of operating profit loses very little on the way to a net income of nearly $ 1.

          If only the MU would be able to continue like this, I can assure you that their stock would not trade multiples of 4-6x for so long …



          • PE ratio (1965 follow-up)

          Speaking of it, Micron's TTM P / E is probably the most attractive Wall Street ever from This size was seen by a company over such a (relatively) long period of time. The problem of the company / stock is that everyone knows that this "gold rush" will end, and basically the stock reflects this since the onset of the onslaught.

          On the other hand, AMD deals with multiples that are unjustifiable from a purely financial point of view. Of course, this is the reflection of MU, as investors expect AMD to improve in the upper and (especially) positive range over time, thus reducing the PE.

          NVDA is (or should be) the "adult in space" and delivers more consistent results.Came the last quarter and remix the cards.We assume that the TTMA-P / E from NVDA will soon be the Mark of 30 will pass, on the way to 40!



          Future Revenues and Other Financial Aspects

          If you think to yourself, MU is a bargain and trades with a forward P / E of just 5.2x – think again , It should be remembered that the TTM P / E ratio is 3.2. So we are talking about a multiple increase of 63%. This could be a huge echo for shareholders, unless profitability is going down as fast and as fast as some analysts expect.

          Given the disappointing profits of the NVDA, it's no wonder that their P / E title almost hits that of AMD in the 30s. It will not be the first or the last time this duo meets on this chart (in the future). Nevertheless, we believe that the red line (from AMD) will be lower over time than that from NVDA (blue line).

          And who knows? In two to three years, we could get all three companies together and trade (more or less) the same multiple. That is something we have not seen for a long time.



          * For Current Fiscal Year, Next Business Year, and Two More Financial Years

          Here are the current market revenue estimates for the foreseeable future:



          Well, let's present the above data a little differently :



          Source: Author, based on Y-charts data (as of 13.03.2014)

          What can we learn from this table when it comes to future sales growth?

          1. MU is completely out of the growth game.
          2. Although NVDA and AMD are expected to grow at approximately the same pace, AMD's growth is expected to be calmer, more stable, and more consistent on average, while for NVDA this is more of a growth future, according to recent unevenness (and assuming that the company has overcome this)
          3. The growth of the past is indeed no indication of future growth. The latter will be much softer and slower for these companies.

          * For Current Fiscal Year, Next Fiscal Year, and 2 Forthcoming Business Years

          Here are the current market EPS estimates for the foreseeable future:



          Let's present the above data a little differently:



          Source: Author, based on Y-charts data (as of 13/03/2014)

          What can we learn from this table when it comes to future revenue growth?

          1. AMD is in its own league. However, it is important to remember that AMD reaches a very low value and can therefore easily be surpassed. In addition, AMD's expectations of finally making money (bottom line) are long overdue. Will this time be different (and AMD will eventually move closer to earning $ 1 a year)? Only time will tell.
          2. MU is also in its own league, but about 3 steps below that of AMD … The market essentially envisages a halving of the EPS of 2018 for MU in ~ 3 years. If this is the case ($ 5.75 per share) and a stock price of ~ $ 40, the multiple will be about 7 times and the current TTM P / E more than double A gentle bump and a short-term delay in Nvidia's long-term, massive growth story. Like few other analysts, we strongly doubt that NVDA could grow at a pace of> 30% in such a short time. It seems unrealistic because such a growth rate was only achieved during the cryptoboom, which even the company itself acknowledged was gone.

          How do we do that

          Let's start with Advanced Micro Devices:



          With regard to the above graph, we've played / played AMD on the Wheel of FORTUNE for the last 16 months:

          Note: As soon as When we sold the long position on 9/4/18 (# 4), the $ 20 CALL we sold on July 31, 18 (# 3) had switched from "covered" to "naked." This naked CALL sale closed on 10/30/18 (# 5b)

          Here we wrote to our subscribers about the last trade (# 6) that was executed earlier this week:

          This is a sale of one naked (ie without owning the stock) CALL option, therefore the risk is obviously high!

          As you already know, our belief in semiconductors is quite weak. As a reminder:

          • Last week we lost our "Top Pick" tag from Micron (MU).
          • Three weeks ago, we sold a covered call on Nvidia (NVDA) (Trapping Value actually shortens it) [19659038] On September 4, 2014, we not only sold our long position in Advanced Micro Devices (AMD), but sold the shares $ 27.28

          We do not expect this segment to come up with great news, which will raise prices from here, even under the rosy scenario.

          In addition, AMD would have been overvalued over US $ 27.28 over six months ago (in our view). You can imagine today that we are even less enthusiastic about the stock at this price.

          The option we are selling will only reduce AMD if the stock rises above $ 26 and is assigned to us. Even then, the net price (of which we will be short) is $ 27.05 = strike ($ 26) + premium ($ 1.05).

          Currently, it is estimated that AMD expires on April 24, 2014, two days before the gains made option. Of course, a delay in reporting (up to a date after 26/04/2013) would make this option less risky than it currently is (assuming that AMD announces the gains two days before the expiration date). The reason is simple: (additional) volatility.

          Since much of an option is attributed to the current and expected volatility of the stock, the value of the stock is significantly reduced by eliminating the risk following the earnings development premium here.

          Here are the possible scenarios for selling this Naked Call option:



          Remember that selling an open call means that the upside risk (mathematically) is unlimited as the stock can go to infinity (and beyond). Therefore, the margin requirement is high, and that's why we tend to play this trade with a relatively short expiration date (just 6.5 weeks away). Otherwise selling the AMD 19.07.2014 26.00 CALL for $ 2 (almost twice as much) would make a lot of sense as 19/19/2019 is likely to fall before AMD announces gains for Q2 / 2019. In both cases, it is likely that we have only one ER by the expiration date. If you do not mind narrowing the margin required by this trade, you can run expiration on July 19th instead of the expiration on April 26th.

          Concerning Nvidia:



          Against this background, here is the procedure described we played NVDA on the Wheel of FORTUNE in the last 17 months:

          Note: The last trade on 20.02.19 (# 4) was with a "double dose": i) covered sale (risk rating: 1, safest) versus our long (1/3 full) position; ii) unsold sales (risk assessment: 5, the most risky), which means that the risk is much greater.

          Here's what we wrote to our subscribers on the last three weeks ago (# 4):

          We had NVDA before the launch of the service and sold it for $ 217. As the stock retreated in November-December 2017, we opened a smaller position (about 1/3 of the position we sold), reaching as high as around $ 300 (October 2, 2018)

          in mid-2018 Stock was already too expensive, so we sold a call of $ 280, but this option was never forgiven, as the price fell like a rock and the stock price expiration date already more than halved (!)

          with the premium we but also with the stock …

          Our revised price target for the stock is now $ 100 – $ 180; Yes, there is no typo here. We will be surprised with no movement (momentarily) up or down. However, as you can clearly see, the minus (60) is 3 times the upside potential (20). So there is a clear lack of conviction, and we fear more of the minus. Therefore, this is a very simple trade for us as it represents a zero risk for us.

          If the option is assigned, we would receive a total (net price) of $ 186 (= strike of $ 160 + $ 26 bonus). slightly higher than our price target and even higher than the price we paid ($ 184.50).

          If the option is not assigned, we get almost half of the downside risk. It might be necessary to relieve the pain when and when …

          Since we do not see much more opportunity for the stock to trade much higher, we actually do so in both ways:

          On the one hand, we sell covered calls that fully protect our long position. If the option is assigned, we will book it against the selling price as we normally do so with options assigned (P & L will be fully absorbed by the underlying stock).

          On the other hand, we act the same way as a naked sale (obviously for a much smaller allocation), which is very risky, but we keep it small.

          In the monthly report you will see two trades, one with risk rating 1 and one with risk rating 5. Don & # 39; I am confused by this double representation.

          Here are the possible scenarios of this trade:



          Last but not least – Micron

          The truth is that we have made MU one of our "top picks for 2019 *" in information technology , at the end of December 2018 (along with the market as a whole) was at a very depressed level.

          In addition we sold the MU 15.03.2014 31.00 PUT option on 01.03.2014 for a premium of 2.75 USD. This option expires today (March 15, 2018) worthless. The annualized rate of return for this trade can be seen in the chart below (indicating possible scenarios at the time of sale).



          However, at the end of February, we MU actually "down" "MU" from its "top pick designation" after a short run of about 50% in just two months from low to high! 19659143]

            Chart

          YCharts data

          With today's expiration of the option sold by us, we now have no direct and / or indirect position in relation to MU. 19659148] Outlook and Price Targets

          We have already addressed each company's own guidelines for the next quarter / year, so there is no point repeating itself.

          Wall Street takes these prospects into account in assessing and estimating the future outcome.

          Below you can see the current EPS estimates for the next two years. Pay close attention to the drastic corrections that EPS estimates have undergone for both NVDA and MU in the last three months.

          Wall Street has reduced its expectations across the board by 20% to 30%, and this could only be the beginning, not necessarily the end.



          Source: Author, based on Wall Street Journal data (as of 13/03/2014)

          At the same time, the EPS estimates for AMD remain very stable and have not changed. This is one of two things: either AMD is a very predictable company (which it is not …) or a more promising operation (it is!) Compared to the other two semis.

          What wall? Street sees PTs everywhere, from euphoria to depression.

          As always, we ignore the extreme predictions (ie, "highest" and "lowest") and stay on Main Street. This refers to the average and median estimates, as they tend to be more reliable and better reflect overall sentiment. In terms of analysts' expectations, our main motto is Respect and Suspicion; mehr von den letzteren als von den ehemaligen …



          Quelle: Autor, basierend auf Daten des Wall Street Journal (Stand 13.03.2014)

          Betrachtet man die obige Tabelle, sind hier einige schnell-sofortige Beobachtungen:

          1. MU hat das höchste Potenzial nach oben (basierend auf dem Durchschnitt, dem Median und den höchsten PT) sowie das niedrigste Abwärtspotenzial (basierend auf den niedrigsten PT).

          2. Obwohl sich die Wall Street darauf konzentriert, dass AMD solider arbeitet als ihre Altersgenossen, gibt es nicht viel Fleisch auf diesem Knochen, je nach durchschnittlicher und mittlerer PT. Mit anderen Worten, AMD wird fair bewertet, wie es ist (eine weitere Begründung für unseren jüngsten Verkauf eines nackten Anrufs hier).

          3. Obwohl NVDA im Vergleich zu AMD anscheinend von einem größeren Aufwärtspotenzial profitiert, können Sie feststellen, dass selbst der höchste PT nicht so positiv ist. Niemand glaubt, dass die Aktie bald ihre Höchststände für 2018 erreichen wird.

          Bottom Line

          Mindestens 2019 wird für NVDA und MU ein hartes Jahr, verglichen mit 2018 Um noch härter zu sein, könnte NVDA mit viel Glück im Jahr 2020 wieder kräftig werden. Allerdings ist der erwartete Rückgang (der Unternehmensgewinne) im Jahr 2019 so tief, dass wir den Dip nicht so früh kaufen würden im Jahr. Wir erwarten mehr Schmerz vor einem bedeutsamen Gewinn.



          Beachten Sie, dass unser Freund und Partner, Trapping Value ("TV"), auf der Grundlage dieser Berechnung "den NVDA-Gewinn in Höhe von nur 2,28 US-Dollar pro Aktie schätzt" :



          Quelle: Nvidia: Game Over

          Auch wenn wir nicht so bärisch wie das Fernsehen sind, sehen wir den Kurs der Aktie sicherlich näher an $ 100 als an $ 200 innerhalb 2019, genau wie im letzten Jahr. [19659168] Unsere Strategie hier bedeutet, dass, wenn NVDA zum Verfallsdatum über 160 USD gehandelt wird, wir unsere Long-Position verkaufen und eine Short-Position zu einem Nettopreis von 186 USD eröffnen würden. Wir glauben sicherlich nicht, dass die Aktie, gelinde gesagt, mehr ist als das.

          Insgesamt ist unsere Einschätzung von NVDA bärisch, und daher lautet unser aktuelles Rating für die Aktie "bedingter Verkauf" = Halten Für den Moment aber verkaufen Sie $ 180-185.

          MU ist derjenige, für den wir am schwierigsten einen Anruf tätigen können, da wir nicht überrascht sein würden, wenn er über $ 50 / share oder unter $ 30 liegt. In beiden Fällen gibt es gute Argumente, und es geht darum, wie schwer die "Verletzungen" sein werden, da die Hauptaktivitäten nun zu weit fortgeschritten sind. Die Schlüsselfrage lautet: Wird es ein allmählicher Abstieg entlang des Berges oder eher ein Sprung von einer Klippe sein?



          Unsere Strategie bei der MU ist zu warten. Wir befürchten, dass der Aufwärtstrend hier sehr begrenzt ist. Angesichts der Markterwartungen scheint es eher so zu sein, als würde er von einer Klippe fallen, eher als allmähliche Anpassung an eine schrumpfende Nachfrage nach Produkten des Unternehmens. Zum jetzigen Zeitpunkt würden wir daher lieber an den Rand treten und zuschauen. Sollte die Aktie wieder auf die 20-Dollar-Marke fallen, könnten wir wieder die Verantwortung übernehmen.

          Insgesamt gesehen ist unsere Einschätzung für MU ebenfalls bärisch, aber wir halten die Aktie nicht für genauso verletzlich wie NVDA. Unser aktuelles Rating für die Aktie ist daher "neutral", aber aufgrund des übermäßigen Risikos (und des begrenzten Aufwärtspotenzials), das wir hier identifizieren, wären wir Käufer auf einem viel niedrigeren Niveau.

          Der interessanteste und vielversprechendste Name among this trio is AMD, but even here, most of the growth potential is expected for periods beyond 2019. For us, as you will be able to see below, AMD has always been a valuation story. As long as the company is making peanuts on the bottom line, we deem the stock attractive below $16, and overvalued above $25.



          Only once we see AMD making $1/year in EPS, would we start thinking of the stock as possibly worth moving into the $30s to stay there.

          Overall our view for AMD is quite bullish for the long-run, just as it has been over the past 16 months. AMD is its inability (thus far) to translate revenue growth and better margins to net income. AMD isn't a start-up anymore and when such a mature company earns only $0.32/year, there's no way we can justify valuations that represent multiples of 81-107x, when the stock traded at prices of ~$26-$34.

          As such, our current rating for the stock is "neutral", as we wait for AMD to "show us the money". There's also the risk that its peer-group (NVDA, MU and possibly even the 3 musketeers: AVGO, QCOM, NXPI) might drag AMD's stock price down along with them.

          Don't forget what we always say, and strongly believe in: Macro Trumps Micro. Even the best, most resilient, stock will find it hard, if not impossible, to withstand a stormy, unhappy, market.

          Over the long-run, it's macro – global, general, market trends – that rules (and leads) the world, much more than micro – company's specific attributes/news.

          You light the skies, up above meA star, so bright, you blind me, yeahDon't close your eyesDon't fade away, don't fade away, oh

          Source: "Rule the World" – Take That

          All in all, it's safe to say that semiconductors have ruled the world in recent years, up to the end of Q3/2018.

          Don't get me wrong: Semis aren't going anywhere, and it's not like we expect this boiling-hot segment to fade away completely. That is true for the trio in this article, as much as it true for the trio in my previous article.

          Nevertheless, just as the majestic performance of "Take That", from the London 2012 Olympics Games, Closing Ceremony implies: Semis, you've lit the skies, up above meMany stars, so bright, you've blinded me, yeahDon't close your (production) linesDon't fade away, don't fade away, oh

          Sooner or later, you can rule the world (again)!

          The Wheel of FORTUNE is a most comprehensive service, covering all asset-classes: common stocks, preferred shares, bonds, options, currencies, commodities, ETFs, and CEFs.

          Take advantage of the two-week free trialand gain access to our:

          • Monthly Reviewwhere all trades are monitored.
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          • Getting Ready For 2019“, a 19-part series, featuring our top picks across eleven sectors plus eight segments.

          Disclosure: I am/we are long NVDA. I wrote this article myself, and it expresses my own opinions. Ich bekomme keine Entschädigung dafür (außer von Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

          Additional disclosure: Short NVDA 01/17/2020 160.00 CALL
          Short AMD 04/26/2019 26.00 CALL


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