Lecture on AMD Stock Investment

Introduction

• Recommendation: Buy AMD stock under $150/share over the next several months.
• Objective: Discuss projections for AMD in different economic scenarios (base, bull, bear cases).
• Previous Success: Other stocks recommended have performed well.

Historical Performance and Sentiment

• AMD stock down 15% over three years.
• Compared to investing in savings, treasuries, or S&P 500, AMD underperformed.
• Compared to NVIDIA’s growth of 1136%, AMD grew 133% since 2022 lows.
• Long-term performance: AMD up 232% (5 years), 4500% (10 years).

CEO and Company Performance

• Lisa Su: Celebrated 10 years as CEO with impressive revenue growth.
• Revenue trends: Significant growth except for one down year.

Business Segments and Financials

• Two main segments: Data Center and Client Segment.
  • Data Center: $3.5 billion revenue, up 122% YoY.
  • Client Segment: $1.9 billion revenue, up 29% YoY.
• Two side segments: Gaming and Embedded, expected to recover by 2025.
• Gross and Net Margins: Significant expected increase.

Future Outlook and Market Potential

• Expected 2025 revenue around $8-9 billion.
• Long-term revenue growth projected with potential gross margins reaching 60%.
• AI Chip Market: Predicted to reach $500 billion by 2028, providing growth opportunities.

Strategic Positioning and Investments

• Portfolio strategy: Recommend investing more in AMD than NVIDIA as AMD has higher growth potential.
• Recent acquisitions (Silo AI, ZT Systems) expected to boost AMD’s capabilities.

Projections

• Base Case:
  • 25% revenue growth, 200% net income growth for 2025.
  • Stock valued at 30-40 PE, estimate: $400-$500/share.
• Bear Case:
  • 15% annual revenue growth, net margins at 31% by 2028.
  • Stock valued at 20-25 PE, estimate: $190-$230/share.
• Bull Case:
  • 35% revenue growth, 35-45 PE, estimate: $640-$800/share.
• Ultra Bull Case: Up to $2,175 per share with 50% revenue growth.
• Ultra Bear Case: Unrealistic, with stagnant growth, stock might halve.

Conclusion

• Strong confidence in AMD's long-term growth.
• Plan to significantly increase investment in AMD.