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Summary

Parkev provides a financial analysis of AMD's latest quarterly earnings, highlighting that revenue increased by 50% to $11.12 billion and non-GAAP operating income surged by 245%. Parkev notes that data center revenue doubled year-over-year, driven by high demand for EPYC CPUs and AI-related products, providing the company with better long-term visibility than in previous cycles. Parkev explains that while the business is performing exceptionally well, the stock market reaction was negative due to valuation concerns.

Parkev emphasizes that AMD's forward price-to-earnings ratio of 37.4 is more than double that of Nvidia's 16.4, despite Nvidia having a stronger competitive advantage in the GPU segment. Parkev suggests that the current momentum was already priced into the stock prior to the earnings release. Parkev believes that the stock is currently stretched and lacks a favorable margin of safety for new buyers at levels approaching $500.

AMD: Parkev reports that the company had an excellent quarter with gross margins rising from 40% to 54% and a shift from an operating loss to a $1.99 billion profit. Parkev maintains a 'Hold' rating because the share price is well above Parkev's intrinsic value estimate of $380. Parkev states that the stock is not a buying opportunity until the price reaches $450 or preferably below $400.

Mentioned Stocks

AMD

Sentiment: HOLD

Reasoning: Parkev acknowledges AMD's strong performance, including 50% revenue growth and significant margin expansion. However, Parkev views the stock as overvalued with a forward P/E of 37.4, which is twice that of Nvidia. Parkev states that Parkev's calculated intrinsic value is $380 and Parkev would only look to buy if the price falls below $450, preferably closer to $400.

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