AMD very much deserves it's outlook in light of their past mistakes and their still going to generate a loss this year ...
Net income losses do not always matter and in AMD's case absolutely do not matter when it comes to its valuation. What matters is the net present value of discounted future cash flows.
https://en.wikipedia.org/wiki/Discounted_cash_flow
AMD is also trading at less than 2.5X Price/Sales. With more than 1.2B of cash on hand and debt reduced to 1.6B (before the rumoured Intel licensing deal), the company's balance sheet hasn't been stronger in a while.
http://finance.yahoo.com/quote/AMD/key-statistics?p=AMD
Your post as well as many anti-AMD posts on here misses the forest from the trees.
"In our view, AMD is the only vendor that can challenge both Intel in PCs and servers and NVIDIA in gaming, pro-graphics, and in deep learning markets
. Collectively this is a $50 billion duopolistic addressable opportunity, with AMD holding less than 5% value share currently, with any success highly accretive to AMD’s current operating model. … Second, AMD has shown strong capability to build semi-custom chips, and monetize its patent portfolio, which creates more growth leverage.
"
One issue brought up is that just 25% of the street analysts really have Buy ratings. That leaves substantial potential for higher earnings revisions ahead. They see the next catalyst being the next-generation Zen gaming PC in the first quarter and the Zen server in the second quarter. They also see high-end graphics in mid-2017 and a third semi-custom win in the second half of 2017.
As far as why the firm was late, the team said that they were too concerned about AMD’s historically weak execution and high debt levels. They also were concerned about competitive risks versus chip industry giants like Intel and NVIDIA. Now Merrill Lynch’s proprietary PC gaming analysis and analysis of artificial intelligence and deep learning suggest that AMD’s growth markets are still in the early stages. They also feel AMD can regain market share. Other positives were shown as follows:
- CEO Lisa Su, who was appointed in late 2014, has delivered a strong turnaround and is focusing on relevant markets and improving past deficiencies in software.
- AMD’s recent refinancing actions have pushed out debt maturities and increased its cash balance to $1.2 billion, which is well above the required $600 million minimum levels."
http://247wallst.com/technology-3/2...hest-amd-target-of-all-over-intel-and-nvidia/
Too many on here are too busy looking at small details like the flagship Vega GPU. From Polaris stack alone, AMD's dGPU market share is up to almost 30% without even trying really. AMD's superior R9 380/380X/280X barely sold compared to GTX950/960, but yet despite RX 470/RX 480 not convincingly outperforming GTX1060 3-6GB, AMD is still gaining market share. What does that tell us? Marketing and perception is a large part of sales in the dGPU industry.
AMD is not building Vega to generate massive profits from flagship sales. They are building it so that they have a
next generation mid-range card which is likely what a refreshed/shrunk Vega will become in the $299-349 segments in 2018. AMD really couldn't care less about flagship $650-1000 dGPU sales since history has shown the majority of NV users
do not switch to AMD. The rest of the market is simply not willing to pay these prices for tech that becomes outdated and depreciates close 1/2 of its value in only 12-15 months (see 780Ti -> 970 or Fury X/980Ti -> today/GTX1070). AMD has to create flagship cards because the architectural advancements are needed for next generation PS5/XB2/Scorpio console design wins. The shift from flagship to mid-range also requires that flagship GPU to exist in the first place. NV can afford to design entirely new chips for every segment but AMD cannot.
That's why AMD isn't sweating that Vega isn't out for so long since for them Vega isn't something that will only sell for 6 months but for 2 years or more. Even if AMD released a fast card for $400-650 in 2016, it would have never outsold the GTX1070/1080. We've seen it before with HD7950 V2/7970/7970Ghz vs. 660Ti/670/680 and with R9 290/290X vs. 780/780Ti. Even when AMD offered bargain prices on unbeatable HD4850/4870/4890 and HD5850/5870/6950 cards, the $300+ dGPU market consumers overwhelmingly chose NV.
I don't know how that would influence investors, though. Seems to me that they are more interested in contracts, revenue, projections--not so much internal updates for a specific line of products.
Bingo. AMD currently holds about 1% market share in the server x86 market. Even if AMD were to increase that share value to 5%, this would be huge for them. Remember that when AMD stock (without ATI graphics) was trading for
$40 a share, AMD only had
25% x86 CPU server market share. I am not saying AMD will go back up to 20-25% but any small gains are tens of millions of dollars for AMD given the size of the market.
When people on here are dogging Zen, they are
also missing the forest from the trees. They think for Zen to be a great CPU, it has to beat Intel in gaming. Absolutely not. Zen was first and foremost designed for the server market. Anyone who doesn't see that is either delusional or ignorant. Everyone on here knows that almost no games take advantage of more than 4C/8T CPU, so then why would AMD be stupid enough to design 8C/16T and 16C/32T Zen CPUs? Obviously gaming was
not the primary market for Zen's design choices.
Other key findings from IDC's forecast include:
- IDC estimates that the average worldwide contract price paid by a server-class microprocessor customer rose 25% from 2010 to 2015. Intel held 93.0% unit share in 2010 and 99.2% unit share in 2015.
- The high market average selling price (ASP) is attracting new microprocessor vendors to the server-class microprocessor market. These vendors are being encouraged by significant sources of demand, such as major cloud service providers and systems makers in China seeking an alternative to Intel.
- In late 2016 and through 2017, several processor vendors will issue new products with the potential to compete with Intel's mainstream product line, the Xeon E5-26xx series. These products include AMD's x86-based Zen, Qualcomm's ARM-based Hydra, Applied Micro's ARM-based X-Gene 3, Cavium's ARM-based ThunderX 2, and possibly Broadcom's ARM-based Vulcan.
http://www.idc.com/getdoc.jsp?containerId=prUS41419716
The demand for servers and deep learning computing is skyrocketing and AMD only has 1% market share in the former and less than 5% in the latter. AMD stock has the potential to double or even triple from today's $10.50 valuation if they execute correctly with Zen in servers and start taking more market share from the $50B aggregate market in which they compete. This market in itself is growing which means both AMD and NV can continue to grow without cannibalizing each other's sales.
"AMD was raised to Buy from Underperform at Merrill Lynch. That is a rare two-notch upgrade, and it comes after AMD shares have risen exponentially off of their lows. Merrill Lynch’s team covering AMD is led by Vivek Arya and Adam Gonzalez, and their price objective was raised to $12 from $5 in this call."
http://247wallst.com/technology-3/2...hest-amd-target-of-all-over-intel-and-nvidia/
The usual suspects dogging on AMD all these years are sitting now in disbelief, spewing their usual anti-AMD agenda on SeekingAlpha, AT and HardOCP, etc., while the rest of the world has been paying close attention to AMD and hasn't given a second thought about the irrelevant Vega. The party is just getting started as the large funds are now plowing right into AMD stock.
As of October 31, 2016, the funds increased their ownership in AMD by almost 12% and it's poised to increase by the end of this quarter. The funds are going long.
Then there are always rumours that AMD could become an even more attractive acquisition target as its financial position starts to improve:
"Advanced Micro Devices (AMD) . The company makes chips in the "hottest" area of semiconductors: gaming, which has double-digit growth, Cramer noted. AMD should be bought by Micron Technology (MU) , according to Cramer. Micron stock has been stuck in the teens and the company is acutely aware it needs to get out of there, Cramer said. "I could see Micron soar on this," Cramer said of a possible acquisition of AMD. The deal would help Micron gain exposure to fast growing markets and be "less trapped" in cellphones and tablets. He noted that AMD does not want to be acquired and it just reported a good quarter.
https://www.thestreet.com/story/13911678/1/jim-cramer-s-top-10-takeout-candidates-for-2017.html
One of the key "issues" with AMD previously (/one of the semi-myths keeping customers away) has been software and updates. This shows, quite demonstratively, that this is in no way an issue any longer. AMD has delivered a nearly staggering number of driver updates this year, and with ReLive they're suddenly competitive with Nvidia in terms of features. Not on par, but not far away either. Which could very well pave the way to bigger sales than before. This is part of why AMD never came close to 50% market share even in generations where they had clearly superior GPU architectures. And last I checked, investors do like sales growth.
Ever since Crimson, AMD's drivers were already better for me than NV's, and we aren't even talking about performance increases and older generation GPU hardware support. To this day AMD continues to add modern features to 3 year old Hawaii GPUs and the performance driver support for HD7000 to R9 200/300 series has been far superior to anything NV brought for its 2012-2014 cards. NV's pre-historic and clunky to navigate Windows XP style interface looks close to a decade behind AMD's new drivers. The best part is AMD also offers the old style interface within their new modern UI under Radeon Additional Settings if you prefer the Windows XP style navigation. You get the best of both worlds, while NV is too busy shoving GeForce Experience at any opportunity -- btw GE is an atrocious piece of software that crashes all the time for me.
We should expect a stock correction at some point (i.e., many investors take some profits off the table in 2016, lock in their gains and minimize the total capital gains of 2017 by splitting the sale across both years) but 2017 should be a good year for AMD.