The Semiconductor Underdog

Monthly Deep-Dive: Advanced Micro Devices $AMD

Investors,

Welcome to the latest edition of monthly deep-dives from Cubic Analytics, where I conduct a thorough review of a subscriber-voted stock. Since launching this series in 2023, I’ve analyzed Chevron Corporation CVX 0.00%↑ & Meta META 0.00%↑ and had the following takeaways:

• Chevron $CVX: Great company in a negatively viewed industry, could be setting up for a contrarian, long-term investment thesis. CVX has extremely strong & consistent operating cash flows and management has exhibited an amazing ability to generate shareholder return over the long-run. The stock’s high dividend yield and generous share buyback program will benefit shareholders, all else being equal; however, I felt that the stock was too expensive and didn’t think it was worth DCA’ing into in late January. Since then (February 1, 2023), the stock has fallen as much as -14% and I still don’t think it’s time to DCA.

• Facebook/Meta $META: Fits within my overall long-term thesis in technology, the digital age, and social media. Management has a clear direction for the future of the company, aka the metaverse, which is being adhered to. This is a big bet, but the company is a cash flow machine and is able to subsidize R&D into MetaLabs with their traditional “family of apps” and their ad-tech revenue business. Despite the massive operating losses generated by MetaLabs, the company is still generating head-scratching cash flows. The company seemed cheap relative to the rest of FANGMAN and I told investors that I planned to buy more shares. I did, and the stock has gained +22% since then (March 1, 2023).

In each of these reports, my goal is to objectively review the companies that you choose and to provide a complete review of the qualitative & quantitative investment thesis. If I like the stock and think it deserves a place in my portfolio, I’ll tell you. If I don’t like the stock, I’ll tell you exactly why it doesn’t deserve a place in my portfolio.

For this review, premium members voted for an analysis of Advanced Micro Devices, often referred to as AMD. The company has long been dismissed as the underdog of the semiconductor industry, playing second-fiddle to Intel in CPU’s and to Nvidia in GPU’s; however, the company has delivered anything but second-fiddle returns and operating performance. In November 2022, I briefly analyzed AMD as one of the runner-ups within my long-term investment portfolio because of how much I love the overall thesis in semiconductors and AMD’s company-specific attributes. Today, we’ll be conducting an in-depth review of AMD 0.00%↑ in order to diagnose whether or not we should be allocating capital into the stock during a time of 4.8% interest rates.

Before doing so, I have one question for premium members:

With so much excitement surrounding the semiconductor industry and the implications around artificial intelligence, ChatGPT, and OpenAI, I’m super excited to share this analysis of AMD.