Advanced Micro Devices: What You Need To Know About The Deal With OpenAI (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• AMD's deal with OpenAI can add up to $192 billion in value. But the stock has risen up only $44 billion, suggesting that there may be more upside yet.
• The latest GPU generation ramp-up is going well, as AMD is shipping its MI350 GPUs in volume ahead of schedule and has secured big customers for its MI450 chips.
• AMD is prioritizing market share growth of its GPUs at the expense of margins. A key risk is that this tradeoff may have a more lasting effect on lower margins.
• AMD typically trades right at the median valuation vs. its semiconductor comps. But now, it is at a 49% premium, suggesting potential relative overvaluation.
• The ratio charts of AMD vs. SPX500 look like they have broken out of a key monthly resistance. But there is no confirmation yet, so I am hesitant to buy right now.

Read the full article here.