Posted on November 30th, 2020
Advanced Micro Devices, Inc. (AMD) has experienced positive growth in recent months after a minor dip around March of 2020. AMD significantly outperformed the S&P 500, rising by approximately 90% compared to the S&P’s gain of about 12.6%. The semiconductor company was recently added to the WhaleWisdom Index on November 16, 2020.
AMD is an American based multinational semiconductor company that designs, manufactures, and markets microprocessors for the computing, communications, and consumer electronics markets. AMD appears to be weathering the coronavirus storm well. Demand for its microprocessors rose as more people switched to working from home. Both quarantines and government stay-at-home orders increased the desire for personal electronics for at-home entertainment. More encouraging yet is that demand is anticipated to continue beyond the pandemic’s end.
Hedge Funds Are Buying
AMD has captured the attention of hedge funds and institutions. Looking at third quarter activity by hedge funds, the aggregate 13F shares held rose to about 155.2 million from 140 million, an overall increase of approximately 10.9%. Of the hedge funds, 57 created new positions, 67 added to an existing stake, 22 exited, and 80 reduced their holdings. Institutions also increased their aggregate holdings by about 3.3%, to approximately 68.4 million from 66.2 million.
Abundance of Growth
AMD has a projected 41.7% rise in revenue for the end of 2020, growing to $9.5 billion. Continued revenue growth is anticipated over the next three years, ranging from approximately 41.7% to 12% across fiscal years 2020 to 2023. For the fiscal year 2023, revenue is expected to grow to about $15.6 billion. There is similar news for earnings, with estimates for $1.24 per share by December 2020 and rising ultimately to $2.49 by 2023.
Persistence Brings Favorable Forecasts
AMD’s persistence through the pandemic brings a positive outlook from analysts. Cleveland Research Co. upgraded AMD to a Buy from a Neutral, with high expectations for fourth quarter performance. AMD also received upgraded ratings from Goldman Sachs Group, Inc. and Wells Fargo & Co. earlier this month, citing valuation as well as gains in portable computers and high-performance computing (HPC). Also, Bank of America Corp. (BofA) has a bullish outlook on the semiconductor company, with high expectations for growth over the next two years. In fact, BofA predicts that growth will quadruple to a compound annual rate of 8% from the calendar year 2020 to 2022.
AMD’s Growth Brings Optimism Beyond 2020
The company gained some impressive upward traction in recent months and overall has had an outstanding 2020. Analysts’ ratings and multi-year estimates for the stock speak to a promising future. Also, amid analysts’ predictions, AMD has generated its own positive PR by donating high-performance technology to leading global research institutions and facilities involved in the fight against the coronavirus.
With demand continuing to grow for AMD’s semiconductors, investors have many reasons to include it in their portfolios.