Semiconductor stocks have been in upward mode since early July, as evidenced by a 22% jump. PHLX Semiconductor Sector index.
Rise in semiconductor stocks Advanced Micro Devices (AMD 3.67%) When micron technology (Mu 3.80%)AMD’s shares are up nearly 36% since early July, while Micron’s are up nearly 15%.
AMD’s stock price surge seems justified, as the company reports fantastic results thanks to healthy demand for its chips. Falling memory prices have made the memory specialist lose its wheels, which puts AMD in a better position to sustain its hot rally and investors should buy its stock over his Micron What does that mean?
^ SOX data by YCharts
AMD is on track
AMD announced its second quarter results on August 2nd, reporting revenue of $6.6 billion, up 70% year over year. The company’s operating margin expanded 6 points year-over-year, and its adjusted earnings increased 67% year-over-year to $1.05 per share.
AMD posted impressive growth across all business segments last quarter. The data center segment hit $1.5 billion in revenue surged 83% year-over-year. The Xilinx acquisition also boosted AMD’s revenue and margins. The acquisition brought the company’s embedded segment revenue to his $1.3 billion, a massive 2,228% year-over-year increase for him.
The chipmaker expects to end the year with $26.3 billion in revenue. This will be a 60% increase for him compared to 2021. More importantly, the diverse markets AMD serves suggest that AMD’s impressive growth will continue for a long time.
For example, AMD’s gaming revenue grew 32% year over year to $1.7 billion in the quarter. The remarkable growth of this segment Sony, microsoft, and valves. All three companies use AMD’s semi-custom chips to power their consoles, and the good part is that we’re seeing strong demand this year that has prompted manufacturers to ramp up production.
Meanwhile, AMD management claims the company has won market share in the PC (personal computer) processor market for nine quarters thanks to healthy demand for chips used in notebooks. Wedbush Securities estimates that AMD may continue to take PC market share from rivals for years to come. intelThis should come as no surprise as AMD enjoys a technological lead over Intel that has allowed it to report impressive growth despite significantly declining PC sales.
Overall, AMD’s growing market share in datacenters and PCs, along with long-term growth opportunities in the gaming console space, are among the reasons analysts expect revenue to grow at a pace of nearly 27% annually over the next five years. department. AMD could therefore remain the top growth stock in the long term.
Micron Technology is in a tough spot
Micron Technology is currently on the market thanks to a glut in the memory market. AMD was able to make up for the weakness in the PC market by gaining more share against Intel, but Micron was unable to do the same.
As demand for memory chips dwindles and prices fall, the company’s days of phenomenal growth are behind us. It could fall below the lower end of the earnings guidance range provided in today’s earnings release.”
Micron has issued disappointing guidance for the end of June. This was significantly below analyst expectations as they expect sales and earnings to contract this quarter. The company said he was deriving $7.2 billion (plus or minus $400 million) in revenue at the midpoint of the guidance range, and now that target looks hard to hit.
Micron warns that the difficult memory environment will continue for at least several quarters. As such, the company has lowered its capital spending forecast for fiscal 2023, stating that next fiscal year’s spending will be “significantly lower than in fiscal 2022.” Analysts expect Micron’s revenue and profits to shrink in the 2023 fiscal year.
verdict
AMD is the clear winner in this showdown as it is on track to maintain solid growth even in a tough environment. Micron, on the other hand, cannot recover unless the memory market turns around. The bad news for Micron is that memory demand growth is expected to be just 8.3% in 2023, making him below 10% for the first time.
High inflation and recession concerns are expected to weigh on memory demand. However, supply is expected to grow by 14%, leading to oversupply and lower prices in the market. As such, investors looking to buy semiconductor stocks today should consider choosing AMD over Micron.
Harsh Chauhan has no positions in any of the mentioned stocks. The Motley Fool US Headquarters Advanced He invests in and recommends Microdevices, Intel and Microsoft. The Motley Fool recommends the following options: Intel’s Jan 2023 long call at $57.50 and Intel’s Jan 2023 short put at $57.50. The Motley Fool’s U.S. headquarters has a disclosure policy.
Comments
Post a Comment