Can a chip-market underdog stage an epic comeback in 2022? That’s the billion-dollar question surrounding Advanced Micro Devices (NASDAQ:AMD). Loyal AMD stock holders are hoping that a turnaround to the upside is imminent.
Suffice it to say that there are multiple headwinds facing Advanced Micro Devices, and chipmakers in general. Among the greatest challenges are a global microprocessor shortage, along with the financial market’s rotation out of technology stocks.
Just recently, Advanced Micro Devices faced a major test as the company released its highly anticipated quarterly results. There was a lot on the line for the company, and for AMD stockholders.
For some traders and onlookers, the company’s forward guidance was as important as the confirmed data. Thankfully, there were some nice surprises and plenty of reasons to stand by Advanced Micro Devices.
AMD Stock at a Glance
Sometimes when it comes to stock-market profits, it’s “easy come, easy go.” That’s why it’s just as crucial to know when to exit a trade, as it is to know when to get in.
Folks who got into AMD stock when it was trading at $100 in early October 2021, did quite well for a while. As it turned out, the share price rose to a 52-week high of $164.46 in just a few weeks.
That would have been a great time to “take the money and run,” as they say. A tough lesson about greed would soon befall anyone who chose to stay in the trade.
The market’s concerns about growth stocks put negative pressure on AMD stock, causing it to drop back to $100 in late January 2022. This was unnerving, no doubt, yet there may be a happy ending to this story.
As of mid-February, it appears that Advanced Micro Devices’ investors might prevail in the end. The share price had already returned to $120, and a revisit of the $160s isn’t out of the question in 2022.
An Outstanding Quarter and Year
Now, let’s get back to the billion-dollar question. Should Advanced Micro Devices’ recent financial performance inspire confidence in skeptical investors?
To answer that, we’ll do what all informed traders should do: turn to the data. Fortunately, the data pertaining to the fourth-quarter and full-year 2021 were overwhelmingly positive for Advanced Micro Devices.
Lisa Su, the company’s president and CEO, stated, “2021 was an outstanding year for AMD with record annual revenue and profitability.” Let’s break down the numbers and see if she’s right about that.
Looking at the top-line results, Advanced Micro Devices posted $4.8 billion in revenue in Q4, up 49% year-over-year (YoY), and $16.4 billion in revenue in 2021, up 68% YoY.
Next, we’ll consider some of the bottom-line results. In non-GAAP terms, Advanced Micro Devices reported net income of $1.12 billion in Q4 2021. That result easily beat the $636 million recorded in the year-earlier quarter.
Great Expectations
As for full-year 2021, the company reported a whopping $3.44 billion in non-GAAP net income, more than doubling the $1.58 billion from the prior year.
In other words, Su had every right to brag about Advanced Micro Devices’ recent fiscal performance. What might the future hold, though?
Su had a great answer to that query. “We expect another year of significant growth in 2022 as we ramp our current portfolio and launch our next generation of PC, gaming and data center products,” she asserted.
Can we quantify Su’s expectations? You bet. For 2022’s first quarter, Advanced Micro Devices expects to generate around $5 billion in revenue (plus or minus $100 million). With that, the company is modeling a roughly 45% year-over-year revenue increase.
Not only that, but Advanced Micro Devices is bracing for a terrific full-year 2022, with a revenue projection of approximately $21.5 billion. That figure would signify an increase of around 31% over 2021’s result.
The Takeaway
Of course, no one can guarantee that Advanced Micro Devices’ forward guidance will become a reality.
Still, the company’s confidence should provide encouragement for AMD stockholders. Financially speaking, it’s conceivable that 2022 will be at least as good as 2021 was for Advanced Micro Devices.
And if that happens, AMD stock should offer excellent shareholder value, as it has done for many years.
On the date of publication, Louis Navellier had a long position in AMD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The 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.
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