NVDA - AMD: Inventory Does Not Lie

2024-07-01 16:56:23 ET

Summary

• I keep rating Advanced Micro Devices, Inc. as a hold due to inventory concerns.
• With its current inventory buildup, AMD's growth outlook and valuation multiples have come into question.
• Competition pressure from Nvidia heightens the concerns.
• Nvidia chips demonstrate far superior pricing power and no inventory issues at all.

AMD stock: hold rating reiterated due to inventory concerns

I last wrote on Advanced Micro Devices, Inc. ( AMD ) with a holding rating back in April 2024 (see the next chart below). My primary concerns at that time were mainly the following:

To conclude, despite the long-term growth prospects (due to factors like high-performance computing expansion and AI adoption), the thesis of this article is that AMD will offer an unattractive return/risk ratio in the near term. And to reiterate, the top concern is the competition pressure from Nvidia in the data center segment (with the potential for customer lock-in). Its high valuation is another additional concern.

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