Too much, too soon?

At the rate we’re going we’ll break 180 by the close. Anyone else inclined to take a little off the table? I’m just selling 5% or so. Unrealized gains aren’t real :confused:

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In the past, when I had significant gains I liked to sell as much as would cover my initial purchase. All remaining shares become profit, setting a floor on not losing money. But maybe that’s just me.

In the past, when I had significant gains I liked to sell as much as would cover my initial purchase. All remaining shares become profit, setting a floor on not losing money. But maybe that’s just me.

Not an unsound strategy but I hate the idea of giving up that much potential upside, unless I’ve had, say, a double or a triple.

Also, I’ve bought quite a few lots at a variety of prices. Wishing I had managed to snag more when, after hours on the last earnings release, I grabbed up a handful of shares (maybe 50?) around $94…

I have serious FOMO keeping me from selling much. But, as they say, bulls make money, bears make money, hogs get slaughtered. I have been selling off a little here, a little there, as we ran up. Right now I’m tempted to just hold.

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All the analysts have a price target in the 190 - 215 range. I swing traded some when it dipped down to 140 a couple of weeks ago and sold yesterday in the 178-179 range. I still have a LTBH position. Will buy back in on the next dip with my cash available…doc

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I did that with Netflix 15 years ago and Zoom 4 years ago - very sorry I did in both cases.

Pete

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I am still holding, and plan to continue holding, all I’ve accumulated since 1999.

To be frank, I would be happy if from here AMD just had slow steady growth, just above inflation, until I reach old age. However, it now looks like AMD will benefit materially from the upcoming AI era, and we might enter my Optimistic scenario ($200-400 stock price) pretty soon. Depending on how it all pans out with AI developments, adoption and competition, times ahead may become really crazy and turbulent.

Here is a 3-year financial roadmap to take AMD into my Optimistic scenario. This requires 25% annual revenue growth, which is slightly above the 20% CAGR set by AMD’s Financial Model, but well below the growth we experienced through the pandemic 2020-2022. Presumably, AI will be the main growth driver.

Feel free to play with the numbers at my OneDrive.

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So you’re looking at, what, a 15+ bagger? Well done.

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Thanks, but it is crazier than that. The wild ride on my beloved AMD rollercoaster went underwater many a time from 1999 to 2016, but I consistently averaged down and accumulated more shares using savings from my meager income. As you know, since then AMD’s rise from the ashes has been mind-boggling. Adjusted for inflation, my gains are now 47x, although nominally 69x!

(Note that this also includes good gains on currency exchange rate, as my holdings are not in USD.)

The AMD turnaround arrived at a good time for me, just as my professional career as an independent software developer started its decline. I am now semi-retired.

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Here is my graphical overview of AMD’s business segment results over the last couple of years:

(Full data at my OneDrive.)

The collapse in the Client segment since 2022-Q3 is remarkable. In the 5 prior quarters, the segment generated a total of $2.9B in operating income. Since then it has lost $0.2B in total. However, there is some glimmer of hope that the segment will improve this year:

“We are aggressively driving our Ryzen AI CPU roadmap to extend our AI leadership, including our next-gen Strix processors that are expected to deliver more than three times the AI performance of our Ryzen 7040 series processors. Strix combines our next-gen, Zen 5 core with enhanced RDNA graphics and an updated Ryzen AI engine to significantly increase the performance, energy efficiency and AI capabilities of PCs. Customer momentum for Strix is strong with the first notebooks on track to launch later this year. Looking at 2024, we are planning for the PC TAM to grow modestly year on year, weighted toward the second half as AI PCs ramp. We continue to see strong growth opportunities for our client business as we ramp our current products, extend our AI PC leadership and launch our next wave of Zen 5 CPUs. […] For 2024, we expect the demand environment to remain mixed, with strong growth in our Data Center and Client segments, offset by declines in our Embedded and Gaming segments.”

2024-Q3 Earnings Call transcript

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You need a longer horizon to look at. Students, work-from-home employees and others had to buy additional or upgraded laptops in 2020-2022 will likely not be upgraded for several years.

Mike

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Well, it is not just the size of the PC market, which is recovering to a decent level after the inventory correction. It is the depressed average-selling-price. While AMD’s revenue in the Client segment has recovered nicely in the last couple of quarters, and now approaches pre-pandemic levels, the operating margin is not recovering much.

($ in millions) 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4
Client
Net Revenue $1,728 $1,692 $1,829 $2,124 $2,152 $1,022 $903 $739 $998 $1,453 $1,461
Operating Income $538 $490 $530 $692 $676 -$26 -$152 -$172 -$69 $140 $55
Operating Margin 31% 29% 29% 33% 31% -3% -17% -23% -7% 10% 4%

Obviously, the competition with Intel is now fierce, with Intel cutting cost and waging a bloody price war, presumably in an effort to stem market share loss and keep factories utilised. I wonder whether it is sustainable, or just a last ditch attempt to hold the fort until they can get Intel Foundry Services off the ground with enough external customers to not all depend on client PC sales for factory utilisation.

On the bright side for AMD, the recovering revenue at depressed ASP indicates some unit share gain. Increased share may turn to nice profit if the price pressure eases.

Now, looking at AMD’s prospects over the next 3 years, the forecasted $3.5B in AI GPU sales this year is not enough on its own to support my Optimistic scenario posted earlier. If the rest of the business remains stagnant, $3.5B is just $3.1B growth (assuming ~$0.4B in AI GPU sales in 2023, according to the earnings call), which equates to +14% growth, well below the +25% annual revenue growth I have modelled for my Optimistic scenario.

Modelling a Stable scenario with more modest +14%, +17% and +20% annual revenue growth for the years 2024-2026, I get ~$36B revenue and ~$6 EPS in 2026 (with 55% gross margin, 25% OPEX and 30% operating margin). This would require a P/E ratio of 17-33 to support a $100-200 stock price.

Feel free to play with the numbers at my OneDrive.

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TBD. The whole AI PC hype cycle may have some effect, and 2022 was recent but 2020 was a good while ago. Just had to replace my kid’s COVID-era home laptop because it was no longer up to the task of playing Fortnite, but also the drive was pretty full-- I’d already upgraded 256GB to 512GB and that was brimming over. My wife has a 2019 laptop which will probably be replaced by my son’s 2020 once it gets a 1TB drive. I wonder how many people just replace a whole notebook rather than trying to understand upgrading the storage? probably most.