We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Time to Buy AMD's Stock After Exceeding Q2 Expectations?
Read MoreHide Full Article
As we continue receiving quarterly results from big tech firms, AMD (AMD - Free Report) stands out after exceeding its Q2 top and bottom line expectations Tuesday evening.
With AMD shares spiking over +10% in this morning's trading session, investors may be wondering if it’s time to buy stock in the chip leader following its favorable Q2 Report.
AMD’s Q2 Results
AMD’s Q2 growth was driven by its Instinct, Ryzen, and EPYC processors which accelerate AI workloads. Designed to compete with Nvidia’s (NVDA - Free Report) AI chips, the Instinct MI300X was a key driver to AMD’s expansion, seeing high demand from cloud and enterprise providers.
This led to Q2 sales rising 9% year over year to $5.83 billion which came in 2% above estimates of $5.7 billion. More impressive, Q2 EPS of $0.69 beat expectations by 3% while spiking 19% from $0.58 a share in the comparative quarter. AMD has surpassed earnings expectations in three of its last four quarterly reports posting an average EPS surprise of 2.32%
Image Source: Zacks Investment Research
Revenue Guidance & Silo AI Acquisition
For the third quarter, AMD is expecting strong growth in its Data Center and Client segments and projects Q3 revenue to be $6.7 billion plus or minus $300 million. This came in slightly above the current Zacks Consensus of $6.58 billion or 13% growth (Current Qtr below).
Additionally, AMD announced it will be completing the acquisition of Silo AI during Q3 for $665 million. Notably, Silo AI is Europe’s largest private artificial intelligence company.
The Silo team is expected to expand AMD’s capability to service large enterprise customers looking to optimize their AI solutions. Silo will also bring deep expertise in large language model development to help accelerate optimization of inference and training solutions.
Image Source: Zacks Investment Research
Recent Price Performance
Year to date, AMD’s stock is still down -2% which has noticeably lagged the broader indexes and Nvidia’s +132%. However, over the last two years, AMD’s +49% has topped the S&P 500 and Nasdaq although this has lagged Nvidia’s stellar gains of over +500%.
Image Source: Zacks Investment Research
Monitoring AMD’s Valuation
AMD’s stock currently trades at 40.6X forward earnings which is a premium to the S&P 500’s 22.9X but closer to Nvidia’s 38.5X. Furthermore, AMD trades well below its five-year high of 107.2X forward earnings and at a noticeable discount to the median of 52.5X.
Image Source: Zacks Investment Research
Bottom Line
AMD’s stock currently lands a Zacks Rank #3 (Hold). While it may be too soon to say an extended rebound is in store for AMD’s stock this year, the company’s growth trajectory remains attractive and the acquisition of Silo AI should be promising for its long-term prospects as well.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Time to Buy AMD's Stock After Exceeding Q2 Expectations?
As we continue receiving quarterly results from big tech firms, AMD (AMD - Free Report) stands out after exceeding its Q2 top and bottom line expectations Tuesday evening.
With AMD shares spiking over +10% in this morning's trading session, investors may be wondering if it’s time to buy stock in the chip leader following its favorable Q2 Report.
AMD’s Q2 Results
AMD’s Q2 growth was driven by its Instinct, Ryzen, and EPYC processors which accelerate AI workloads. Designed to compete with Nvidia’s (NVDA - Free Report) AI chips, the Instinct MI300X was a key driver to AMD’s expansion, seeing high demand from cloud and enterprise providers.
This led to Q2 sales rising 9% year over year to $5.83 billion which came in 2% above estimates of $5.7 billion. More impressive, Q2 EPS of $0.69 beat expectations by 3% while spiking 19% from $0.58 a share in the comparative quarter. AMD has surpassed earnings expectations in three of its last four quarterly reports posting an average EPS surprise of 2.32%
Image Source: Zacks Investment Research
Revenue Guidance & Silo AI Acquisition
For the third quarter, AMD is expecting strong growth in its Data Center and Client segments and projects Q3 revenue to be $6.7 billion plus or minus $300 million. This came in slightly above the current Zacks Consensus of $6.58 billion or 13% growth (Current Qtr below).
Additionally, AMD announced it will be completing the acquisition of Silo AI during Q3 for $665 million. Notably, Silo AI is Europe’s largest private artificial intelligence company.
The Silo team is expected to expand AMD’s capability to service large enterprise customers looking to optimize their AI solutions. Silo will also bring deep expertise in large language model development to help accelerate optimization of inference and training solutions.
Image Source: Zacks Investment Research
Recent Price Performance
Year to date, AMD’s stock is still down -2% which has noticeably lagged the broader indexes and Nvidia’s +132%. However, over the last two years, AMD’s +49% has topped the S&P 500 and Nasdaq although this has lagged Nvidia’s stellar gains of over +500%.
Image Source: Zacks Investment Research
Monitoring AMD’s Valuation
AMD’s stock currently trades at 40.6X forward earnings which is a premium to the S&P 500’s 22.9X but closer to Nvidia’s 38.5X. Furthermore, AMD trades well below its five-year high of 107.2X forward earnings and at a noticeable discount to the median of 52.5X.
Image Source: Zacks Investment Research
Bottom Line
AMD’s stock currently lands a Zacks Rank #3 (Hold). While it may be too soon to say an extended rebound is in store for AMD’s stock this year, the company’s growth trajectory remains attractive and the acquisition of Silo AI should be promising for its long-term prospects as well.