Cho Research

About the Author Cho Research

Best tech/finance blogger on TipRanks. Alex Cho is ranked 7th among all financial bloggers, with a sector focus of technology stocks. The research he publishes captures the long-term growth potential of tech franchises, and market valuation. His research recommendations over the span of five-years has averaged into an annualized return of 19.3% across 392 ratings of which 66% were successful. Over his years of publishing, Alex Cho has been an indispensable source of information for an investment minded audience, which is why his lifetime viewership has exceeded ten million in total since 2012, across various media platforms. Furthermore, he’s frequently cited in various local business journals across the United States, and is frequently tagged with the “in-depth” designation on Google News for his public articles. The quality of his research is well known, and is well-respected which is why he’s frequently cited by other authors, journalists, bloggers and experts. Alex Cho was a former founding partner of Alexander & Cohen Capital Management, has worked as a consultant for mid-stage tech companies looking to raise capital or form an exit strategy, with the most recent consultation billed to a client that was generating revenue of $10 million+ in the web domain/registrar segment. Alex Cho is frequently invited to interview members of management at various Fortune 500 tech companies’ due to his outstanding media credentials, and credibility. Furthermore, he frequently attends various tech media events at the request of the event organizers. Alex Cho has a great relationship with Wall Street and Silicon Valley, as well. In the Venture Capital Space, he has sources that are inclusive of VC Partners, and independent research from PitchBook, Mercury Data, eMarketer, MergermarketGroup, and so forth. Anyone facing the public with investment related material needs quality sources, which should be inclusive of insights from Private Equity and various sell-side institutions and debt rating agencies as well (Standard & Poor’s, Fitch, & Moody’s). Alex Cho publishes with the support of Bank of America Merrill Lynch, Morgan Stanley Americas, Royal Bank of Canada Capital Markets, United Bank of Switzerland AG, Barclays Americas, Goldman Sachs, J.P. Morgan, Credit Suisse AG, PiperJaffray, Wedbush Securities, Oppenheimer & Co., Nomura Securities, BMO Capital Markets, Raymond James, Pacific Crest, SunTrust, Mizuho Securities, Deutsche Bank and Canaccord Genuity. Alex Cho attended ASU via the MAPP program with a 3.76 GPA in business-finance. The genius behind Cho has less to do with his academic accomplishments, but rather his ability to navigate, adapt, and improve the quality of his work through all the activities he has engaged. In the past year, Alex Cho has launched a new marketplace service referred to as Cho’s Investment Research. To learn more about this service, or to receive article notifications, be sure sure to subscribe. We provide frequent updates via our Blog Posts, which goes out to our subscribers.

Advanced Micro Devices (AMD) Stock Holds Promise Ahead of Q1’19 Earnings

All eyes will be on the numbers when Advanced Micro Devices (AMD) reports its first-quarter results along with its guidance for Q2’19 after the market close today.

Currently, the analyst consensus anticipates that AMD will report revenue and dil. EPS of $1.26 billion and $.05, respectively. AMD’s revenue is expected to decline by -23.7% from prior-year, which would be owed to weakness in demand for GPUs. Albeit, there could be a surprise tied to GPU revenue given the launch of Radeon 7, which could drive average selling prices higher, or margins higher in the quarter, as AMD’s efforts in the $600 price range have improved markedly vs Vega GPUs.

AMD stock has steadily rallied since January 2019 with momentum improving on the prospect that the company would gain market share versus Intel.

Some of this was already priced-into shares heading into the quarter, so AMD will need to deliver a meaningful beat on guidance to move the needle further, which seems doable given the weak commentary from Intel when it announced its Q1’19 earnings results. What will likely offset some of the CPU revenue momentum would be the seasonal drop-off in semi-custom revenue, as game console sales tends to drop-off between Q4 vs Q1.

However, AMD’s CPU revenue will likely surprise to the upside as market share gains could be more significant in Q1’19 and Q2’19, which makes the business particularly attractive. Intel reported declining unit shipments tied to CPUs, implying that AMD gained 3% of the desktop market, and 4% of the notebook market in the prior quarter.

Currently, the consensus anticipates that AMD will report revenue and earnings of $1.52 billion and dil. EPS of $0.09 in Q2’19, financial guidance will need to exceed the $1.52 billion, which seems doable given the momentum in CPUs.

So, the expectations embedded into financial forecasts seem beatable, as AMD’s market share gains adds more revenue upside tied to earnings results and could even offset some of the weakness in financial results tied to GPUs and consoles. In a prior article we have published, we estimated that AMD could sell 19 million+ notebook CPU units this year, but with desktops also showing some momentum as well, it’s likely that desktop shipment growth could offer even more upside than what prior market share analysis implied.

Another major theme heading into AMD’s quarterly earnings reports will be the 7nm ramp of Ryzen series CPUs. Investors will want confirmation on the 7nm ramp and expected delivery date given Intel’s guidance of 10nm deliveries in holiday season or Q4’19. When transitioning to new nodes, AMD’s gross margins worsen given the cost of wafers are a little higher to help the fab recoup on costs tied to the new fab buildout.

Not to mention, AMD will commit more cash towards wafer supply, which may lead to some additional commentary relating to wafer supply and costs associated with those efforts. The impact from this might diminish profitability a little, but it’s really the early recognition of costs associated with deliveries of Ryzen 3 that will increase cost, as AMD is anticipated to sell-in more CPUs in the PC OEM channel and to various datacenter customers this year. So, analysts will likely shrug at the impact from acquiring added supply in anticipation of higher deliveries, but there will be a short-term recognition of cost, associated with this activity as well.

Another surprise on the quarterly call could be datacenter revenue, more specifically EPYC deliveries. Commentary coming out of Intel’s quarterly earnings report implies that AMD gained meaningful market share, as Intel’s server unit volumes fell by 8% in the prior-quarter. IT investments from a number of customers must have shifted over to AMD, though the number of unit deliveries is difficult to anticipate. We anticipate that the impact from server CPU volumes will be a positive on gross margins, as server CPUs tend to sell at higher price points than consumer CPUs, and it will also contribute to AMD’s revenue.

All in all, the set-up seems relatively attractive, as AMD has done a number of things correctly heading into the quarter, such as the pickpocketing of its number 1. rival in the CPU business. While the commentary pertaining to graphics revenue won’t add much upside, it certainly doesn’t hurt that expectations attached to the graphics business has diminished heading into the quarter, so bad news here is already anticipated.


Disclosure: The author has no position in AMD stock.

Read more on AMD:


Stay Ahead of Everyone Else

Get The Latest Stock News Alerts