June 25, 2021
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Transcript

Marko Rojnica

AMD is an American multinational semiconductor company that develops computer processors and related technologies for enterprise and retail markets.

Chances are that one or more devices you own are actually powered by AMDs processors or chips.

The company was founded in 1969 by Jerry Sanders and they went public in 1972.

Since the early days, AMDs biggest rival was Intel. In fact, AMD was producing microprocessor chips for Intel during the 80s.

Then in 1991, AMD introduced its own chip, which was in direct competition to Intel’s chips.

This rivalry would go on for decades, until this very day.

Throughout the years, they were spinning off their different businesses and acquiring new ones to expand their production & innovation capabilities.

So in 2006, they acquired ATI Technologies, a graphics processor company for $4.3 billion and 58 million shares of its stock.

That’s when they entered the graphics card business.

Then in 2008, they decided to spin off their manufacturing business so they could focus solely on chip design.

After 2011, when AMD announced that Rory Read, a former Lenovo executive, would be joining AMD as the CEO, is when problems started.

From 2011 to 2014, AMD was in a lot of trouble. The stock even reached a record low of $2, and there were a lot of bankruptcy talks.

But in October of 2014, AMD announced that Rory Read would step down and that Lisa Su would become the new CEO.

In October 2014, AMD was trading around $3… and Lisa Su was able to turn the company around into one of the main semiconductor players in the United States, and the entire world.

So, where is AMD going next, and how can we use Options to profit from it?

In this video, I’ll guide you through the bull and the bear case…

Then, we’ll get Felix Frey to give us his view on the stock, and show us different Options plays that you can use, whether you’re bullish or bearish…

So stay tuned, you don’t want to miss it!

So, we have a long-standing semiconductor stock that made a huge comeback in the last 5 years, going from $5 to even reaching as high as $99 a few months back.

My name is Marko Rojnica, and I’m going to show you what the bulls and bears are saying about AMD, and then, we’re going to have Felix Frey show us a few different options plays.

Before we dive into the first bullish argument, let’s quickly go over AMD’s current business model.

Advanced Micro Devices, or AMD, is a leading global semiconductor company whose primary business is designing and marketing x86 microprocessors, or CPUs.

In addition, they derive around 20% of their revenue from GPUs, which are graphics processing units, and around 12% of their revenue comes from APUs (accelerated processing units).

APUs are actually GPUs and CPUs combined into one chip, and while they can serve the purpose of both, they aren’t as powerful, so you’ll most often find these chips in “cheaper” laptops and devices that don’t require a lot of power.

Because of their innovative leader Lisa Su, AMD has almost a cult-like following, and during her leadership, the company made a series of outstanding decisions that drove share gains in CPUs against Intel.

With that in mind, let’s jump into the first bullish point…

1) Strong Growth Numbers and Great Leadership

Lisa Su has turned an almost bankrupt AMD in 2014, valued at $2 billion to a dominant force in the chip industry worth almost $100 billion today.

She managed to disrupt a once-dominant leader, Intel, by chipping away at their CPU market share.

Before Lisa Su, AMD chips were considered inferior and had a bad rep among both business and retail consumers, but she managed to turn that around with the launch of their Ryzen series in 2017.

To see how much of an impact Lisa Su had, let’s take a look at their numbers.

AMD’s revenue grew by a compound annual growth rate of 22.4% over the past 3 fiscal years.

Sell-side consensus is forecasting revenues to grow by 49.7% in 2021, reaching $14.6 billion. They are also estimating a 15.9% growth in 2022, reaching $16.9 billion.

Over the past 3 fiscal years, AMD’s EBIT margin increased by 11.3% points from 5.7% to 17%. This margin expansion story is expected to continue.

In fact, the street consensus is forecasting EBIT margin to expand by 390 basis points this fiscal year to 20.9%, and expand by 217 basis points in 2022 to 23%.

As a result of their revenue, margin and share dynamics (they paid out 2.6% of revenue on share-based compensation), EPS grew at a CAGR of 96.5% over the past 3 fiscal years, significantly outpacing its revenue growth.

AMD is in a great financial shape with a net cash balance of $2.8 billion and return of invested capital at a strong 50.4%.

Going forward, consensus is forecasting EPS to increase by 67% to $2.15 in 2021, and increase by 25.4% to $2.70 in 2022.

The company performed very well over the past year, returning 8% points more than the S&P500.

These strong numbers and growth potential make the bulls very excited, so let’s keep going and see what else the bulls are saying.

2) Competitive Advantages & Market Share Expansion

We’ve noted that you can’t say AMD without saying Intel.

These companies have been fierce competitors ever since they were founded.

Intel has been dominating the chip industry for decades. Their market cap is around $230 billion, while AMD’s is around $100 billion.

Intel has around 7x AMD’s R&D budget and around 10x more employees.

However, despite this, AMD was able to come closer and narrow the gap. 

In January this year, AMD, for the first time in 15 years, overtook Intel in the desktop CPU market share!

After they’ve won the PC market, AMD has went on a streak of closing new deals and expanding their reach across different industries.

Just recently, AMD added Tesla as a customer. Their processors and graphics chips will be used in the infotainment systems of the newly updated Tesla Model S and Model X.

AMD also enjoys continued support from Sony & Microsoft as the Playstation 5 and Xbox Series X are running AMD’s CPU and GPU.

Bulls also like to point out a deal with Samsung from 2019 when they announced a collaboration.

In January 2021, we have Samsung confirming that their next flagship Exynos mobile processor will feature an AMD’s GPU.

This is a massive opportunity for AMD because Samsung holds 23% of the global cell phone market, and if they’re able to successfully position themselves in the mobile category, there’s a lot of growth to be had there.

Lastly, looking at their enterprise innovations and growth, they are currently ahead of Intel in terms of their server processors.

AMD offers a better bang for their customer’s buck when it comes to performance, and they’ve proven that with their 3rd generation server processors.

AMD’s confidence in their business is further reiterated by their plan of buying back $4 billion worth of stock fueled entirely by cash generated from their operations.

All of this points to a strong growth in AMD, so let’s now take a look at the last bullish point, and that is…

3) The Xilinx Deal Advantage

In October of 2020, AMD bought Xilinx in a $35 billion all-stock deal.

Xilinx is another US chip company that is going to help AMD in their battle for market share against Intel.

The deal is expected to close at the end of 2021, and it would create a combined firm with 13,000 engineers and a completely outsourced manufacturing strategy.

Bulls argue that going after Xilinx makes a lot of sense for AMD, both operationally and financially.

On one hand, Xilinx will significantly strengthen AMD’s data center offering, provide significant cross-selling opportunities and most importantly, it would get AMD’s foot in the door of lucrative automotive and wireless telecom sectors.

Lastly, this would significantly expand the Total Addressable Market of AMD, which is key for driving the long-term growth narrative.

Now, that’s how Xilinx makes sense for AMD operationally, but what about financially?

For one, Xilinx is much more profitable than AMD and generates significantly more free cash flow when adjusted for size.

This free cash flow margin is both significantly higher and less volatile than that of AMD, which would help reduce overall risk during market downturns.

For these reasons, bulls see a lot of potential for AMD’s partnership with Xilinx and find it a great addition for the company.

Now, before moving on to the bear arguments, let’s quickly recap the bullish points we’ve made in AMD:

The bulls start off with AMD’s strong growth numbers and great leadership… followed by their competitive advantages and market share expansion.

Lastly, bulls believe that their recent deal with Xilinx will be very beneficial for the company over the long run.

Those were the main bullish points in AMD, but let’s now take a look at what the bears are saying…

1) AMD is Overvalued

Currently, AMD is trading at around 10 times it’s annual revenue of 2020, which was $9.7 billion, bringing in a $100 billion market cap.

As far as we know, the company is not planning on paying out any dividends in the future.

Bears argue that the main reason AMD is valued so highly is because of momentum, while momentum seems to be running out.

The chip shortage is a great threat to companies like AMD, who are not the producers of chips, but rather designers and developers.

If the production of chips is low, they don’t have much say in that. AMD has to keep innovating and developing to stay afloat, and if they can’t sell their latest inventions at the rate they’re used to, that can lead to trouble.

Now, while the bears do acknowledge AMD’s strong growth numbers, they argue that the stock is overvalued and that the fair price should be lower.

Some of their primary concerns for that is the fact that investors are continuing to rotate from momentum trades to value companies.

As we can see in AMD’s stock over the last couple of months, that has had a significant impact on the price.

Adding this to the fact that AMD’s bold future predictions are still heavily dependent on predicting the future semiconductor cycles, investors might be unpleasantly surprised when factors out of AMD’s control start hurting the stock.

The company is trading at around 15x its current book value, compared to an industry average of 3.73.

Their P/E ratio is at around 35x as opposed to Intel’s P/E ratio of 13x.

Even at the EV/EBITDA front, AMD seems overvalued at 43x, while the industry averages are around 16x.

With those numbers in mind, bears calculate a 5 year Discounted Cash Flow analysis of the company which gave them a $69 per share price.

That’s more than 10% less than the current price levels.

Their main concern is the unpredictability of the industry and how the industry’s potential negative impacts would hurt the stock.

With that said, let’s take a look at the second bearish points, and that is…

2) Strong Competition

We all know that AMD is in a highly competitive industry, with the main player being Intel.

With a much larger market capitalization, more R&D investments and employees, Intel is far ahead of AMD in terms of their business stage.

Intel’s leadership in advanced packaging still remains uncontested. This is a very important aspect in the company’s enterprise solutions.

The bears claim that AMD launching a high-end chip won’t pose a threat to Intel, as Intel just announced a $3.5 billion investment to bring even more impressive technologies to its portfolio.

Another thing that AMD got wrong was that it was slow in moving to the latest process technology from TSMC, giving Intel the opportunity to get back to process technology they’ve fallen behind on much sooner.

And lastly, when comparing AMD to Intel, stating that Intel is behind AMD in their CPU technology is baseless as they are close to parity and have very similar roadmaps.

But that’s only the Intel story, the bears say… what about other market threats?

For one, you have Apple announcing that they’re replacing AMD’s and Intel’s x86 CPU for its own silicon design across the entire Mac line.

What about Nvidia launching their own ARM-based CPU that is going to be tightly coupled with their top-of-the-line GPUs to provide even better performance?

Ampere, which already has the Altra, will be launching a successor in 2022.

Marvell with it’s Octeon DPU.

Tencent and Alibaba are also looking to expand their ARM use in cloud operations.

Amazon is looking to roll out Graviton3 server chip.

All of these innovators are looking for a displacement of the x86 chips, which are AMD’s main chips.

If this were to happen in the next few years, and if AMD is left behind, this can pose big problems for the stock.

With that in mind, let’s now take a look at what the bears have to say about the Xilinx deal…

3) Xilinx Deal is Overvalued and Dilutive for Shareholders

The bears like to point out that the Xilinx deal won’t be as fruitful for the AMD shareholders as many are led to believe.

Once the merger goes through, AMD shareholders will hold 74% of the combined company, while the Xilinx holders will get 26%.

AMD will then need to issue a lot of stock to pay for the transaction, and with those new shares created, that will dilute the existing shareholders.

The next problem that arises is the fact that AMD is paying 74 times Xilinx earnings.

The bears argue that this offer is priced for perfection, meaning that both AMD & Xilinx would have to outperform their past efforts to justify such a high price.

FPGA market (Field Programmable Gate Array market), which is the market that Xilinx is in, is only expected to grow 8.6% between 2020 and 2027.

That means that AMD is paying 74x PE for an 8% growth market potential, and to make things worse, they are paying for a 3.26% growth which was Xilinx’s revenue Compound Annual Growth Rate between 2011 and 2020. ($2.369b to $3.163b)

Compare that to AMD, which had a revenue CAGR growth of 11% over the past 10 years.

The bears do acknowledge AMD’s tremendous growth under Lisa Su’s leadership, but they just can’t wrap their heads around the fact that AMD is paying 74x PE for a company…

That is growing revenue at a 3% CAGR in a market that is growing at an 8% CAGR.

So, those were the main bearish points in AMD…

Let’s now take another look at the bullish & bearish points before having Felix Frey on to give us a few different trade ideas in AMD.

Bullish Points

  • Strong Growth Numbers and Great Leadership
  • Competitive Advantages & Market Share Expansion
  • The Xilinx Deal Advantage

Bearish Points

  • AMD is Overvalued
  • Strong Competition
  • Xilinx Deal is Overvalued and Dilutive for Shareholders

So, that was the rundown of AMD, where we looked at the bullish and bearish points, but now it’s time to get Felix Frey on…

Where he’ll give us his view on the stock, lead us through the technical analysis and give us a few different options trade ideas that we can play no matter if we’re bullish or bearish…

Stay tuned, the best is about to come!

Felix Frey

Coming soon

Marko Rojnica

Thank you Felix for giving us a few different Options Trades to consider in AMD…

Now, if you enjoyed the video, please leave a like 

AND if you’d like to see more stock analysis just like this one… 

make sure you subscribe to the channel and turn on the bell notifications.

Also, I would love to hear your thoughts on AMD... And I’d like YOU to add to the story. Comment your thoughts & opinions on the bullish & bearish cases we’ve made… and tell us where you think AMD is going next.

Don’t forget, OptionsGeek also has a comprehensive Options education program called 3 Steps to Profit that teaches you how to Trade Options like the Top 1%.

As a bonus, you also get 1 month free of Felix Frey’s Winning Picks Premium ideas, so make sure you check the link in the description!

Get 3 Steps to Profit + 1 Month of Free Winning Picks Premium Ideas

Thank you, I’ll see you in the next one.

Watch Next

CCIV Bulls vs Bears

SKLZ Bulls vs Bears

NIO Bulls vs Bears

FUBO Bulls vs Bears

Find Your Next Idea


Transcript

Marko Rojnica

AMD is an American multinational semiconductor company that develops computer processors and related technologies for enterprise and retail markets.

Chances are that one or more devices you own are actually powered by AMDs processors or chips.

The company was founded in 1969 by Jerry Sanders and they went public in 1972.

Since the early days, AMDs biggest rival was Intel. In fact, AMD was producing microprocessor chips for Intel during the 80s.

Then in 1991, AMD introduced its own chip, which was in direct competition to Intel’s chips.

This rivalry would go on for decades, until this very day.

Throughout the years, they were spinning off their different businesses and acquiring new ones to expand their production & innovation capabilities.

So in 2006, they acquired ATI Technologies, a graphics processor company for $4.3 billion and 58 million shares of its stock.

That’s when they entered the graphics card business.

Then in 2008, they decided to spin off their manufacturing business so they could focus solely on chip design.

After 2011, when AMD announced that Rory Read, a former Lenovo executive, would be joining AMD as the CEO, is when problems started.

From 2011 to 2014, AMD was in a lot of trouble. The stock even reached a record low of $2, and there were a lot of bankruptcy talks.

But in October of 2014, AMD announced that Rory Read would step down and that Lisa Su would become the new CEO.

In October 2014, AMD was trading around $3… and Lisa Su was able to turn the company around into one of the main semiconductor players in the United States, and the entire world.

So, where is AMD going next, and how can we use Options to profit from it?

In this video, I’ll guide you through the bull and the bear case…

Then, we’ll get Felix Frey to give us his view on the stock, and show us different Options plays that you can use, whether you’re bullish or bearish…

So stay tuned, you don’t want to miss it!

So, we have a long-standing semiconductor stock that made a huge comeback in the last 5 years, going from $5 to even reaching as high as $99 a few months back.

My name is Marko Rojnica, and I’m going to show you what the bulls and bears are saying about AMD, and then, we’re going to have Felix Frey show us a few different options plays.

Before we dive into the first bullish argument, let’s quickly go over AMD’s current business model.

Advanced Micro Devices, or AMD, is a leading global semiconductor company whose primary business is designing and marketing x86 microprocessors, or CPUs.

In addition, they derive around 20% of their revenue from GPUs, which are graphics processing units, and around 12% of their revenue comes from APUs (accelerated processing units).

APUs are actually GPUs and CPUs combined into one chip, and while they can serve the purpose of both, they aren’t as powerful, so you’ll most often find these chips in “cheaper” laptops and devices that don’t require a lot of power.

Because of their innovative leader Lisa Su, AMD has almost a cult-like following, and during her leadership, the company made a series of outstanding decisions that drove share gains in CPUs against Intel.

With that in mind, let’s jump into the first bullish point…

1) Strong Growth Numbers and Great Leadership

Lisa Su has turned an almost bankrupt AMD in 2014, valued at $2 billion to a dominant force in the chip industry worth almost $100 billion today.

She managed to disrupt a once-dominant leader, Intel, by chipping away at their CPU market share.

Before Lisa Su, AMD chips were considered inferior and had a bad rep among both business and retail consumers, but she managed to turn that around with the launch of their Ryzen series in 2017.

To see how much of an impact Lisa Su had, let’s take a look at their numbers.

AMD’s revenue grew by a compound annual growth rate of 22.4% over the past 3 fiscal years.

Sell-side consensus is forecasting revenues to grow by 49.7% in 2021, reaching $14.6 billion. They are also estimating a 15.9% growth in 2022, reaching $16.9 billion.

Over the past 3 fiscal years, AMD’s EBIT margin increased by 11.3% points from 5.7% to 17%. This margin expansion story is expected to continue.

In fact, the street consensus is forecasting EBIT margin to expand by 390 basis points this fiscal year to 20.9%, and expand by 217 basis points in 2022 to 23%.

As a result of their revenue, margin and share dynamics (they paid out 2.6% of revenue on share-based compensation), EPS grew at a CAGR of 96.5% over the past 3 fiscal years, significantly outpacing its revenue growth.

AMD is in a great financial shape with a net cash balance of $2.8 billion and return of invested capital at a strong 50.4%.

Going forward, consensus is forecasting EPS to increase by 67% to $2.15 in 2021, and increase by 25.4% to $2.70 in 2022.

The company performed very well over the past year, returning 8% points more than the S&P500.

These strong numbers and growth potential make the bulls very excited, so let’s keep going and see what else the bulls are saying.

2) Competitive Advantages & Market Share Expansion

We’ve noted that you can’t say AMD without saying Intel.

These companies have been fierce competitors ever since they were founded.

Intel has been dominating the chip industry for decades. Their market cap is around $230 billion, while AMD’s is around $100 billion.

Intel has around 7x AMD’s R&D budget and around 10x more employees.

However, despite this, AMD was able to come closer and narrow the gap. 

In January this year, AMD, for the first time in 15 years, overtook Intel in the desktop CPU market share!

After they’ve won the PC market, AMD has went on a streak of closing new deals and expanding their reach across different industries.

Just recently, AMD added Tesla as a customer. Their processors and graphics chips will be used in the infotainment systems of the newly updated Tesla Model S and Model X.

AMD also enjoys continued support from Sony & Microsoft as the Playstation 5 and Xbox Series X are running AMD’s CPU and GPU.

Bulls also like to point out a deal with Samsung from 2019 when they announced a collaboration.

In January 2021, we have Samsung confirming that their next flagship Exynos mobile processor will feature an AMD’s GPU.

This is a massive opportunity for AMD because Samsung holds 23% of the global cell phone market, and if they’re able to successfully position themselves in the mobile category, there’s a lot of growth to be had there.

Lastly, looking at their enterprise innovations and growth, they are currently ahead of Intel in terms of their server processors.

AMD offers a better bang for their customer’s buck when it comes to performance, and they’ve proven that with their 3rd generation server processors.

AMD’s confidence in their business is further reiterated by their plan of buying back $4 billion worth of stock fueled entirely by cash generated from their operations.

All of this points to a strong growth in AMD, so let’s now take a look at the last bullish point, and that is…

3) The Xilinx Deal Advantage

In October of 2020, AMD bought Xilinx in a $35 billion all-stock deal.

Xilinx is another US chip company that is going to help AMD in their battle for market share against Intel.

The deal is expected to close at the end of 2021, and it would create a combined firm with 13,000 engineers and a completely outsourced manufacturing strategy.

Bulls argue that going after Xilinx makes a lot of sense for AMD, both operationally and financially.

On one hand, Xilinx will significantly strengthen AMD’s data center offering, provide significant cross-selling opportunities and most importantly, it would get AMD’s foot in the door of lucrative automotive and wireless telecom sectors.

Lastly, this would significantly expand the Total Addressable Market of AMD, which is key for driving the long-term growth narrative.

Now, that’s how Xilinx makes sense for AMD operationally, but what about financially?

For one, Xilinx is much more profitable than AMD and generates significantly more free cash flow when adjusted for size.

This free cash flow margin is both significantly higher and less volatile than that of AMD, which would help reduce overall risk during market downturns.

For these reasons, bulls see a lot of potential for AMD’s partnership with Xilinx and find it a great addition for the company.

Now, before moving on to the bear arguments, let’s quickly recap the bullish points we’ve made in AMD:

The bulls start off with AMD’s strong growth numbers and great leadership… followed by their competitive advantages and market share expansion.

Lastly, bulls believe that their recent deal with Xilinx will be very beneficial for the company over the long run.

Those were the main bullish points in AMD, but let’s now take a look at what the bears are saying…

1) AMD is Overvalued

Currently, AMD is trading at around 10 times it’s annual revenue of 2020, which was $9.7 billion, bringing in a $100 billion market cap.

As far as we know, the company is not planning on paying out any dividends in the future.

Bears argue that the main reason AMD is valued so highly is because of momentum, while momentum seems to be running out.

The chip shortage is a great threat to companies like AMD, who are not the producers of chips, but rather designers and developers.

If the production of chips is low, they don’t have much say in that. AMD has to keep innovating and developing to stay afloat, and if they can’t sell their latest inventions at the rate they’re used to, that can lead to trouble.

Now, while the bears do acknowledge AMD’s strong growth numbers, they argue that the stock is overvalued and that the fair price should be lower.

Some of their primary concerns for that is the fact that investors are continuing to rotate from momentum trades to value companies.

As we can see in AMD’s stock over the last couple of months, that has had a significant impact on the price.

Adding this to the fact that AMD’s bold future predictions are still heavily dependent on predicting the future semiconductor cycles, investors might be unpleasantly surprised when factors out of AMD’s control start hurting the stock.

The company is trading at around 15x its current book value, compared to an industry average of 3.73.

Their P/E ratio is at around 35x as opposed to Intel’s P/E ratio of 13x.

Even at the EV/EBITDA front, AMD seems overvalued at 43x, while the industry averages are around 16x.

With those numbers in mind, bears calculate a 5 year Discounted Cash Flow analysis of the company which gave them a $69 per share price.

That’s more than 10% less than the current price levels.

Their main concern is the unpredictability of the industry and how the industry’s potential negative impacts would hurt the stock.

With that said, let’s take a look at the second bearish points, and that is…

2) Strong Competition

We all know that AMD is in a highly competitive industry, with the main player being Intel.

With a much larger market capitalization, more R&D investments and employees, Intel is far ahead of AMD in terms of their business stage.

Intel’s leadership in advanced packaging still remains uncontested. This is a very important aspect in the company’s enterprise solutions.

The bears claim that AMD launching a high-end chip won’t pose a threat to Intel, as Intel just announced a $3.5 billion investment to bring even more impressive technologies to its portfolio.

Another thing that AMD got wrong was that it was slow in moving to the latest process technology from TSMC, giving Intel the opportunity to get back to process technology they’ve fallen behind on much sooner.

And lastly, when comparing AMD to Intel, stating that Intel is behind AMD in their CPU technology is baseless as they are close to parity and have very similar roadmaps.

But that’s only the Intel story, the bears say… what about other market threats?

For one, you have Apple announcing that they’re replacing AMD’s and Intel’s x86 CPU for its own silicon design across the entire Mac line.

What about Nvidia launching their own ARM-based CPU that is going to be tightly coupled with their top-of-the-line GPUs to provide even better performance?

Ampere, which already has the Altra, will be launching a successor in 2022.

Marvell with it’s Octeon DPU.

Tencent and Alibaba are also looking to expand their ARM use in cloud operations.

Amazon is looking to roll out Graviton3 server chip.

All of these innovators are looking for a displacement of the x86 chips, which are AMD’s main chips.

If this were to happen in the next few years, and if AMD is left behind, this can pose big problems for the stock.

With that in mind, let’s now take a look at what the bears have to say about the Xilinx deal…

3) Xilinx Deal is Overvalued and Dilutive for Shareholders

The bears like to point out that the Xilinx deal won’t be as fruitful for the AMD shareholders as many are led to believe.

Once the merger goes through, AMD shareholders will hold 74% of the combined company, while the Xilinx holders will get 26%.

AMD will then need to issue a lot of stock to pay for the transaction, and with those new shares created, that will dilute the existing shareholders.

The next problem that arises is the fact that AMD is paying 74 times Xilinx earnings.

The bears argue that this offer is priced for perfection, meaning that both AMD & Xilinx would have to outperform their past efforts to justify such a high price.

FPGA market (Field Programmable Gate Array market), which is the market that Xilinx is in, is only expected to grow 8.6% between 2020 and 2027.

That means that AMD is paying 74x PE for an 8% growth market potential, and to make things worse, they are paying for a 3.26% growth which was Xilinx’s revenue Compound Annual Growth Rate between 2011 and 2020. ($2.369b to $3.163b)

Compare that to AMD, which had a revenue CAGR growth of 11% over the past 10 years.

The bears do acknowledge AMD’s tremendous growth under Lisa Su’s leadership, but they just can’t wrap their heads around the fact that AMD is paying 74x PE for a company…

That is growing revenue at a 3% CAGR in a market that is growing at an 8% CAGR.

So, those were the main bearish points in AMD…

Let’s now take another look at the bullish & bearish points before having Felix Frey on to give us a few different trade ideas in AMD.

Bullish Points

  • Strong Growth Numbers and Great Leadership
  • Competitive Advantages & Market Share Expansion
  • The Xilinx Deal Advantage

Bearish Points

  • AMD is Overvalued
  • Strong Competition
  • Xilinx Deal is Overvalued and Dilutive for Shareholders

So, that was the rundown of AMD, where we looked at the bullish and bearish points, but now it’s time to get Felix Frey on…

Where he’ll give us his view on the stock, lead us through the technical analysis and give us a few different options trade ideas that we can play no matter if we’re bullish or bearish…

Stay tuned, the best is about to come!

Felix Frey

Coming soon

Marko Rojnica

Thank you Felix for giving us a few different Options Trades to consider in AMD…

Now, if you enjoyed the video, please leave a like 

AND if you’d like to see more stock analysis just like this one… 

make sure you subscribe to the channel and turn on the bell notifications.

Also, I would love to hear your thoughts on AMD... And I’d like YOU to add to the story. Comment your thoughts & opinions on the bullish & bearish cases we’ve made… and tell us where you think AMD is going next.

Don’t forget, OptionsGeek also has a comprehensive Options education program called 3 Steps to Profit that teaches you how to Trade Options like the Top 1%.

As a bonus, you also get 1 month free of Felix Frey’s Winning Picks Premium ideas, so make sure you check the link in the description!

Get 3 Steps to Profit + 1 Month of Free Winning Picks Premium Ideas

Thank you, I’ll see you in the next one.

>