Advanced Micro Devices Is a Growth Machine. Xilinx May Be Its Next Catalyst.

It’s been nearly two months since I last wrote about Advanced Micro Devices (NASDAQ:AMD). At the time, AMD stock was trading for just over $78. Caught up in a broad tech stock selloff, it had slumped nearly 20% since a record-high close of $97.25 on Jan. 11.

AMD (AMD) sign outside of office building with greenery
Source: JHVEPhoto / Shutterstock.com

Back then, I argued then that the low price made AMD stock a buying opportunity. The company had all the pieces in place to reverse course and turn 2021 into another big win for investors. Shortly after, the shares began a lengthy rally.

Of course, they’ve given some of their gains back over the past week, but at this point AMD stock is up about 12% since my March article. Shares are still down by a handful of percentage points since the start of the year, but we’re only halfway through 2021. So, plenty of time remains for my prediction to come true. And in the meantime, with shares currently in the $87 to $88 range, the stock price is tempting.

AMD Stock: A Stellar First Quarter and Solid Product Lineup

While AMD stock stumbled in January, the news in 2021 has been nothing short of spectacular for this chipmaker.

I went through all the details back in March. Highlights include AMD seizing the lead in desktop CPU sales in the first quarter and the release of its highly anticipated Ryzen 5000 series mobile processor for laptops. Additionally, AMD has put out its new Radeon RX 6000 series graphics cards as well as custom chips for the hot-selling latest generation PlayStations and Xboxes. Finally, the company’s third generation EPYC servers are killing it in the data center — with more good news on that front possible before the end of the year.

And, on top of all of this, AMD ended May with a stellar Q1 earnings report. Revenue grew 93% year-over-year (YOY), operating income was up 223% YOY and the company even issued guidance for full-year 2021 revenue growth to top 50% YOY.

The Xilinx Acquisition

The company’s products and quarterly results are not the only reasons to like AMD stock, however.

Last October, Advanced Micro Devices also announced it was acquiring Xilinx in a deal worth $35 billion. Xilinx is one of the world’s largest vendors of field programmable chips (FPGAs). These are often used as add-ons to enhance the performance of data-center servers, as well as in networking applications. All in all, this acquisition would greatly enhance AMD’s data center offerings, which are already making big gains in market share. AMD says Xilinx would increase its total addressable market (TAM) to $110 billion.

Moreover, on Jul. 1, the deal was approved by EU regulators. Previously, it had passed the deadline for the Federal Trade Commission (FTC) to open a U.S. antitrust investigation. So, at this point, the remaining hurdle is Chinese regulatory approval. Last week, the deal entered the second phase of that process.

If the Xilinx deal clears this final obstacle to closing (which is expected to happen later this year), you can look for big movement from AMD stock.

Bottom Line on AMD Stock

I am not the only one who feels that AMD stock still has plenty of growth runway. CNN Business is tracking 33 investment analysts who cover Advanced Micro Devices. They have a consensus “Buy” rating on the stock. Their median price target of $110 represents over 26% upside.

Several days ago, Goldman Sachs also reiterated its “Buy” rating for AMD, raising its price target from $106 to $111. Goldman thinks the Street is underestimating both the company’s near-term and long-term revenue growth.

In terms of Portfolio Grader, AMD stock now earns a “C” rating. There’s an element of risk here, to be sure, but I think the prospects of long-term growth outweigh it. It doesn’t matter what you’re talking about right now — PCs, laptops, gaming, data center, or Internet of Things (IoT) — AMD is in the thick of it. With shares still down slightly for 2021, now might be the time to make a move if you’ve been considering AMD stock for your portfolio. 

On the date of publication, Louis Navellier held a long position in AMD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today


Article printed from InvestorPlace Media, https://investorplace.com/2021/07/amd-stock-is-a-growth-machine-xilinx-may-be-its-next-catalyst/.

©2021 InvestorPlace Media, LLC