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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.

AMD Stock Earnings: The Upside Opportunity Outweighs the Risk


Advanced Micro Devices (AMD) reported a fairly solid quarter albeit the impact from CPUs was still unable to offset the weakness in graphic segment revenues. This was broadly anticipated given the steep drop-off in demand for GPUs in general. Overall, the chip giant reported Q1’19 revenue of $1.27 billion and dil. EPS of $0.06, slightly beating consensus estimates of $1.26 billion and dil. EPS of $0.05.

AMD stock responded mildly to the earnings announcement, as shares advanced only 0.50% in Wednesday’s trading session.

Despite the on-going decline in GPU related revenue, AMD’s positioning in the CPU segment was affirmed with strong commentary relating to Ryzen and impending launches of 7nm products. CEO Lisa Su goes onto mention within the press release, “We delivered solid first quarter results with significant gross margin expansion as Ryzen and EPYC processor and datacenter GPU revenue more than doubled year-over-year. We look forward to the upcoming launches of our next-generation 7nm PC, gaming and datacenter products which we expect to drive further market share gains and financial growth.”

AMD stock responded mildly to the earnings announcement, as shares advanced only 0.50% in Wednesday’s trading session.

AMD is anticipating a recovery across all of its reporting segments and affirmed the release of a PlayStation 5 featuring AMD’s Zen 2 plus Navi GPU (7nm) architecture via its earnings release slides. Gross margins improved to 41% in Q1’19 versus 36% from Q1’18, which was related to higher GPU and CPU pricing, along with datacenter mix leading to higher gross margins.

AMD Q2’19 guidance on revenue, “For the second quarter of 2019, AMD expects revenue to be approximately $1.52 billion, plus or minus $50 million, an increase of approximately 19 percent sequentially and a decrease of approximately 13 percent year-over-year. The sequential increase is expected to be driven by growth across all businesses. The year-over-year decrease is expected to be primarily driven by lower graphics channel sales, negligible blockchain-related GPU revenue and lower semi-custom revenue.”

The revenue guidance of $1.52 billion +/- $50 million, compared to consensus expectations of $1.52 billion implying that if AMD’s internal models are correct, the company will deliver a modest revenue beat next quarter when assuming a best-case scenario. However, the guidance for FY’19 (full-year results) implies a steep 2H’19 ramp-up of revenue, as AMD forecasts that revenue will grow by “high single digit percentages,” and gross margins to stay above 41% despite the launch of new products heading into the second half of the year.

Given the 23% sales decline in Q1’19, and anticipated 13% sales decline in Q2’19, for AMD to report +8% or +9% sales growth in FY’19, 2H’19 (second half) revenue would need to grow by 20%+. This seems doable given the market share gains from Intel in the CPU segment, whereas graphics revenues are expected to stabilize and improve sequentially throughout the year. The full-year revenue outlook was the biggest surprise coming out of the quarter, as consensus estimates implied +5% sales growth in FY’19 versus +8% or +9% sales growth from financial outlook.

The drop-off in semi-custom revenue and graphics card shipments was anticipated exiting the quarter, though the up-beat commentary relating to 2H’19 results diminishes concerns tied to graphics and semi-custom revenue. The weakness in semi-custom results comes at a time where we’re nearing the end of a console generation with annual comps anticipated to improve on the launch of next-gen consoles next-year. Also, the downbeat commentary relating to graphics could inflect more positively in the 2nd-half with declines likely to moderate given the launch of 7nm Navi GPUs.

Bottom line:

Risk/reward seems to favor AMD bulls. AMD delivered solid earnings, and back-half guidance was the biggest surprise coming from the report. Assuming AMD delivers next-gen products on time, and market share and margins continue to improve sequentially throughout the year, fundamentals should lead to better stock performance over the next 12-months.

 

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