Ever since Lisa Su took over as the company’s CEO, long-term investors have hoped for a turnaround in Advanced Micro Devices (NASDAQ:AMD), and in recent years, AMD stock has done quite well.
Bold and highly accomplished, Su has been much more than a figurehead for a top-tier chipmaker that had been losing money from 2012 until she accepted the CEO position in October of 2014.
Some investors have been focusing their attention on AMD’s recent earnings report, which had mixed results. However, I see Lisa Su’s leadership as the real driver of growth for Advanced Micro Devices stock, which has already marked fresh highs and could easily make further gains through next year.
Celebrating the Progress of AMD Stock
Just as the AMD stock price has progressed through the years despite periods of struggle, the greater semiconductor industry has truly found its footing in recent years.
Yale Law School’s Alessandro Romano’s research study observes the pervasive and largely beneficial impact that AMD and its ilk have made on the broader economy:
“[A]dvances in semiconductors increase the productivity of industries that use chips (computers and telecommunications), but also lead to the development of more advanced computer-aided engineering and computer integrated manufacturing. In turn, advances in these industries produce positive spillovers… that reach almost every sector of the economy.”
AMD has played a major role in the microprocessor revolution, but it wasn’t always a smooth ride as the company lost some of its market share to rivals Intel (NASDAQ:INTC) and Nvidia (NASDAQ:NVDA) in the early 2010s. Accordingly, the Advanced Micro Devices stock price languished and some investors lost faith in AMD’s ability to keep up with fast-moving tech developments.
Then came Lisa Su, who has definitively proved her skeptics wrong and slowly but surely steered the company and the AMD stock price in the right direction. As I’m writing this, the Advanced Micro Devices stock price is close to its $40-ish peaks of 2000 and 2005, and is possibly coiling to break through to new high-water marks in the foreseeable future.
Decent Earnings, Powerful Product Pipeline
We can’t ignore the company’s recent earnings report, so let’s parse the numbers: AMD’s third-quarter 2019 adjusted earnings per share came out to $0.18, which was exactly in line with the analyst community’s expectation. Meanwhile the company posted third-quarter sales of $1.8 billion, which barely fell short of the $1.83 billion estimate provided by analysts.
That doesn’t sound like anything to write home about, but Su drew investors’ attention to the milestones achieved during the quarter, along with the innovations that drove them:
“Our first full quarter of 7-nanometer Ryzen, Radeon and Epyc processor sales drove our highest quarterly revenue since 2005, our highest quarterly gross margin since 2012 and a significant increase in net income year over year.”
Never resting on her laurels, Su and company are already preparing to roll out AMD’s latest generation of mobile processors based on 7-nanometer Zen 2 technology, with a target shipping time frame of early 2020. Clearly, AMD’s CEO is eager to take on this highly competitive industry with new and exciting products:
“You’ll start to see our next-generation mobile products, as well, coming in early 2020. You’ll see 7nm mobile chips that have yet to come to market. That’s a pretty strong portfolio. We’re well underway with Zen 3 as a follow-on, as well, for 2020 — lots of product activity. Even though 2019 was a big product year, I think 2020 will be an even larger product year for us.”
The Bottom Line on AMD Stock
The third-quarter earnings season was fairly decent for the company, but AMD stockholders shouldn’t spend too much time dwelling on a year that’s nearly over.
Instead, let’s do what the brilliant and ever ambitious Lisa Su does: look to the future with anticipation, not just for more profits but for the promise that true innovation brings.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
