1/10/25 - $amd - Opening 2.5% position as of open1/10/25 :: VROCKSTAR :: NASDAQ:AMD
Opening 2.5% position as of open
copy/pasting my chat w D on the USSA's day off for dead prez. bc situation fluid, but want to do this timely. AMD is a buy here in a YE context. will size up closer to $100 is TL;DR
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the short answer is we're probably much closer to a floor than where stock will be in a 1-2Y context. interestingly they spend a massive amt of $ on a relative basis (e.g. as a % of revenue) vs. peers on R&D. for perspective NVDA is ~7-8 bn last year, amd is approaching 6 bn. so optically this "hurts" EBITDA mgn, cf generation etc. etc. and stock looks relatively more expensive.
but given su's ties to jensen (cousins i believe), what she's done w the biz, their now will-be leadership in x86 and move into more interesting applications (datacenter)... the GM should begin to flex sooner than later - so the right bogey (if there's confidence here in leadership) is probably not a '25 # but a '26 figure. should we not see any ST hiccups in 25 the stock will be a double between here and YE '26. it's objectively cheap considering execution risk.
this is a tough one for me - i've been trading AMD since the late '90s (albeit with less experience vs. today) and caused me to ultimately short it on that meteoric rise it had in the last 5-10y only to realize... something was different. zooming out - it's hard to deny execution has been good (they've basically dethroned intc from a technical advantage going back several years, and they have a capable team attacking new surfaces).
given trump, china, high 10Y rates etc. etc. nevermind it's been a weaker semi into year end '24 and to start this year... it's unclear beyond a broader sector reversal what fundamental factors/ announcements will move the stock decisively and effectively putting a true floor on the stock.
if your downside is say 20% or maybe at most 25% here, but upside (from same pt here ~$120) is also 20-25% with decent degree of confidence given cash gen, not expensive etc. etc. but where upside scenario is 100% in 2Y and downside scenario still might only be 35-40%... it's clearly a "buy". now what size is critical. do you run a concentrated book ( NYSE:TSM and NASDAQ:NVDA will lead), can you rotate out of winners into laggards
these are all portfolio decisions that depend on factors, mostly personal. but if you asked me point black "is it a buy, yes or no". the answer is, yes.
i might copy this answer b/c i've gotten this question from like 5 ppl in the last 5 days lol but haven't spelled it out in so much detail. i'd also like to understand if anyone has a real information edge here , or where we should be looking. i'd guess gross margin (and by extension gross profit) will be the main driver of stock as it portends successful use of R&D spend and CF flex w/ growth. in that vein, you could probably put this at 3% fcf and with such high growth "re-rate 30-50%" into year end (from current levels).
near $100 the stock is a 5% position, esp if it's only market related beta sell off e.g. trump comes in and everything gets whacked immediately on some tariff news or anti-china blah blah etc. that's an ez size up.
my guess is it's probably worth a 1% spot here with a wait and see approach to take it to 1.5% (even higher nevermind lower) and if we do get some 10-15% further pullback, 3% makes sense and any additional 5% probably should add 1% per 5%. in other words you're at 5% at close to $100 give or take with great risk reward for that capital to remain patient for the year.
hope that helps give my POV.
