Founded as a start-up in 1969, Advanced Micro Devices (AMD) began with a focus on semiconductor products. Accomplishing many industry firsts, they then went on to grow into a global company. Today, they are developers of high-performing computing and visualization products, solving some of the toughest challenges globally.
AMD produces the most powerful computer processors worldwide and power devices. They are also known for their supercomputers, game consoles, always-on cloud infrastructures, and laptops.
Initially manufacturing their own processors, they later outsourced their manufacturing, also referred to as fabless.
AMD’s major competitors include NVIDIA Corp and Intel Corp. Less specialized companies such as International Business Machines Corp (IBM) are also competitors.
The AMD 25×20 Energy Efficiency Goal
AMD has a core focus on the environmental and climate change impacts within product design, operations, and supply chain practices.
In 2014, AMD set its 25×20 Energy Efficient Goal. The purpose was to improve energy efficiency by 25 times for their laptops’ mobile processors by 2020. They achieved this goal and are now improving waste recycling, water use, and electricity use.
The AMD 25×20 Energy Efficiency Goal achieved the following results:
- 84% less energy consumption
- 80% less average calculation time for a given task
The 3rd Gen AMD Ryzen™ Processor with Radeon™ Vega Graphics (“Renoir” 2020) also exceeded their goal by helping their customers improve performance and reduce power consumption.
Innovation Through Collaboration
AMD’s goal is to develop the technology of the future with their partner’s goals in mind. They have partners in cloud computing, motorsports, healthcare, entertainment, and more. With so many visions in various industries, they can bring clarity to high-performing computing. They have insight into consumer needs within the market and continue to improve lives with their groundbreaking technology.
Perlmutter Supercomputer
AMD has joined forces with the National Energy Research Scientific Computing Center (NERSC) and Berkeley Lab to produce the new Perlmutter supercomputer powered by AMD EPYC 7003 Series processors. The supercomputer will provide 4x the computational power that’s currently available at NERSC. This makes the supercomputer the fastest worldwide for data analysis, scientific simulation, and artificial intelligence (AI).
The supercomputer has been in development since 2019 and will help facilitate advanced and faster research in clean energy, climate, microelectronics, semiconductors, and quantum information science.
AMD President and CEO Dr. Lisa Su
In October 2014, Dr. Lisa Su became AMD’s president and CEO. She was the fourth president and CEO appointed in six years. Having joined the company in 2012, she has garnered several accolades since then, including:
- Barron’s – One of the world’s 50 Best CEOs – 2019
- Forbes – One of the Most Powerful Women in Business – 2019
- Bloomberg – The Bloomberg 50 list of people who defined the year
- Fortune – #2 Business Person of the Year – 2020
Dr. Su’s appointment as CEO was the beginning of a new era for the struggling company. Between 2011 and 2012, AMD laid off nearly a quarter of its workforce to stay afloat. AMD stock lost more than 60% of its value in 2013. AMD’s market share was low, with the company not focusing enough on the rapidly growing tablet and mobile industry.
How Dr. Lisa Su Turned AMD Around
The first change Dr. Su made was to restructure the company into two groups. One group focused on refining embedded, enterprise, and semi-custom, such as game consoles, cloud gaming, servers, networking, etc. The other group was dedicated to graphics and computing to consumer graphics, PC platforms, workstation graphics, and VR.
Dr. Su wanted to simplify AMD’s operations by diversifying into upcoming technologies and focusing on the right technology investments.
In 2017 was the launch of Zen-based Ryzen CPUs. AMD’s market share soared to just below 11%. AMD continued to grow, and by the first quarter of 2019, they had recovered nearly 30% of the CPU market share and secured over 30% of the GPU market share in the second quarter.
In 2018, under Dr. Su’s leadership, AMD was the S&P 500’s best-performing stock, with the company having its most profitable year since 2011. She helped push AMD to a $100 billion market capitalization, with its stock soaring more than twenty-fold since becoming CEO.
AMD now gets brought up alongside NVIDIA and Intel when leading gaming hardware manufacturers get mentioned. It’s no longer Intel dominating the industry; instead, it’s become a battle between the two companies.
Dr. Su has had much influence in a male-dominated industry. She is currently the main force behind AMD’s financial success, with her vision and guidance heading one of the gaming industry’s leading companies. In an industry that men typically dominate, she’s the one that’s ensuring the hardware gaming industry stays profitable and competitive.
At AMD, she likes to say, “There’s always the next 5% that we could do a little bit better.” Dr. Lisa Su is a force to be reckoned with, setting an example for all women in the gaming and tech industries.
The Joint Venture Between AMD and the Chinese
There is an agreement between Advanced Micro Devices and China-based partners intended to build x86-compatible and CPUs to reduce China’s dependence on foreign technology. This agreement is called the AMD-Chinese joint venture and is in response to the 2018 trade war between China and the US.
The US Department of Commerce permitted AMD to export Zen 1 core design to China. Since there are legal restrictions, AMD had to create multiple companies that allow the licensing of x86 technology to China. The joint venture is Tianjin Haiguang Advanced Technology Investment Co. Ltd. (THATIC) and is owned by public and private Chinese companies.
Two other joint ventures to note are Haiguang Microelectronics Co. Ltd. (HMC) and Chengdu Haiguang Integrated Circuit Design Co., Ltd (Hygon). AMD owns the intellectual property of the chip, although subcontractors manufacture it, and Hygon designs the chip.
AMD’s Recent Developments
In October 2020, AMD’s wholly-owned subsidiary, Thrones Merger Sub Inc, entered into a merger agreement with Xilinx Inc (NASDAQ: XLNX), a logic device programmer. Xilinx will combine with Thrones Merger Sub, making Xilinx a wholly-owned subsidiary of AMD through the merger.
The transaction is valued at $35 billion and will help AMD to strengthen and broaden its business. The deal is subject to approval and should close by the end of 2021.
Latest Financial Results: Quarter 1 – 2021
AMD released its financial results for the 2021 first quarter.
- Revenue was $3.45 billion, up 93% year-over-year (YoY), 6% quarter-over-quarter (QoQ). Higher revenue was driven up in both the Embedded and Semi-custom, Computing and Graphics, and Enterprise segments.
- The gross margin was 46%, flat YoY and up 1% point QoQ. The Ryzen, EPYC, and Radeon processor sales resulted in the QoQ increase.
- CG revenue was $2.10 billion, up 46% YoY and up 7% QoQ.
- EESC revenue was $1.35 billion, up 286% YoY and up 5% QoQ. Data center revenue more than double YoY.
AMD (NASDAQ: AMD) Stock News
Shares have doubled since their low results in March 2020, with the current share price at $80.08 (as of May 30, 2021). AMD stock continues to have upside potential. AMD stock has also risen 1.5x from the level it was pre-pandemic. Because of AMD’s outstanding first-quarter results for 2021 and high demand, AMD stock can still rise further.
Where is AMD Stock Headed?
Because of the global pandemic and lockdowns in early 2020, demand for semiconductors was affected. Nevertheless, demand for computing devices and gaming rose, along with the demand for data centers. As a result, AMD enormously benefited during the pandemic.
AMD’s revenue in quarter one of 2021 nearly doubled from $1.79 billion in Q1 2020 to $3.45 billion in Q1 2021. As lockdowns ease across the globe, manufacturing capacities will begin to step up to pre-pandemic levels. AMD could see additional revenue and margin growth in the medium term. According to Forbes, “Advanced Micro Devices stock can rise around 20% from current levels, to regain its recent highs of $99.“
Final Thoughts
AMD expects its revenue to grow by 50% over 2021 through all its businesses. The completion of the merger with Xilinx later in the year could be a game-changer for the company.
AMD has concentrated on building long-term relationships with its industry-leading partners. They continue to push the world to innovate and propel the computing industry forward.
AMD stock is the perfect growth stock because of its solid fundamentals and stronghold within the market. There is a considerable possibility that AMD stock could hit $100 later in the year if you consider the company’s growth in revenue and sales across all their products.
We cannot discount Dr. Lisa Su as a leader of this technology company who is leading the way. She has had a lot of influence amongst the male-dominated executive teams. If she continues to lead AMD forward, you can look to adding AMD stock to your portfolio for long-term growth.