As the desktop CPU market plunges, one stock situated within the industry continues to thrive – and that’s AMD. Despite record-low desktop CPU shipments, AMD (Advanced Microdevices) managed to report gains in the last quarter. What makes this particularly interesting is that AMD’s competitors – Intel, Nvidia, and more – are struggling. Yet, through a deep analysis of AMD’s stock, our system has uncovered 3 reasons the stock is rated a buy.
The Current Landscape of the Desktop CPU Market
Mercury Research – a company specializing in PC component market research (microprocessors, graphics components, and more) – released its market share results from the second quarter of 2022. As mentioned above, Mercury Research reported the largest year-over-year decline in microprocessors and graphics components sales since 1984. This plunge has been caused by OEMs reducing their inventory – which led to a drop in demand. Further exacerbating the issue were lockdowns in China, rapidly growing inflation, and overall economic turmoil.
Looking at other players in the industry, Intel reported a loss for the first time in a few decades. Similarly, Nvidia drastically underperformed by about $1.4 billion. So – how is AMD continuing to improve upon its already impressive profitability despite these conditions? What are they doing differently? Its revenue is up 70% year over year and thanks to higher data center and embedded segment revenue (amongst other things) and is preparing to launch new CPUs and GPUs – which will only add to its domination of the desktop and notebook PC market.
3 Reasons AMD is Rated a Buy: Despite a Treacherous PC Market
Those who are already invested in AMD have not seen the performance they may have hoped for – as the company stock peaked back in November of 2021 at a price of over $164/share. Since then, there has been a steady fall to earth, with a low point of $75/share back in early July. At the time, our stock forecasting system rated the stock a sell. But fast forward to mid-August and the stock is sitting back in the triple digits at just over $100/share, and is now being rated a buy. Here are three reasons why:
- Excellent Upside Potential: When looking at the relative value (RV) of AMD, you’ll see it’s been given a rating of 1.52 – which is excellent on a scale of 0.00-2.00. This suggests excellent long-term price appreciation potential.
- Very Safe: Investors can enjoy peace of mind entering a position in AMD when taking into account the very low degree of risk associated with this stock. Our system is showing an RS (relative safety) rating of 1.40 – which is far above average on our scale of 0.00-2.00. This is calculated by analyzing the consistency and predictability of AMD’s financial performance and business longevity – along with many other indicators.
- A Strong Trend in the Right Direction: Those who got into AMD early are being rewarded for their patience and commitment – as the RT (relative timing) for the stock is currently 1.24. This suggests a solid trend in the stock’s price movement in the right direction. This is a particularly important indicator for investors to monitor, though – as the RT will gravitate back towards 1.00 as the trend dissipates.
The VectorVest system ranks stocks by averaging the VST (value, safety, timing) together – and AMD boasts an incredible VST rating of 1.38. As such, it’s been rated a buy.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for AMD, it has incredible upside potential, it is safe, and the timing is pretty good at the moment.
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