AMD: I See Risks That Keep Me On The Sidelines (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

• Advanced Micro Devices, Inc.'s Q4 results were mostly in-line with expectations, driven by strong performance in the client computing segment as a result of market share growth fueled by Ryzen processor uptake.
• The data segment has an uninspiring outlook with a flat H1 FY25 vs. H2 FY24. The key growth catalyst is in H2 FY25 with the launch of the MI350 GPU.
• I expect EBIT margins to be contained with some potential downside pressure in FY25 driven by mix-shift impacts and production ramps.
• AMD's elevated receivables and inventory levels that are outgrowing overall revenues pose risks that may become more apparent in a demand downturn.
• AMD stock is trading at a 15% discount to peers. The relative technicals vs. the S&P500 are in a monthly downtrend but close to major multi-quarter support levels.

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