AMD is really cheap right now, about $3.65 / share. I think they could be poised for a big upside. They make the CPU/GPU in the Xbox One and the PS4. They expect to sell about 40 million consoles a year. And China is lifting the video game / console ban starting in January 2014.

Also, the top AMD GPU (r9 280x; r9 290x) is in high demand right now, mostly due to gamers and bitcoin miners.

Thinking about picking up 100 shares or so. Why not?

What makes you say AMD is cheap?  The company has had negative earnings, is pretty leveraged, and I'm not seeing a lot of strength financially aside from their cash (which they're burning so long as they aren't turning a profit).  The stock has decreased while the market as a whole has surged.  Initial glance shows several red flags.

Interesting thesis though.  I haven't looked into AMD as a company and what they could accomplish.  What are you looking to play, the January 20th earnings, something more?  From my perspective it surely isn't a slam dunk but I'm not familiar with them aside from the fact they were left in Intel's shadow.

I guess it's too early to tell how the Chinese market will play out. All that stuff you mentioned is interesting and probably more important than what I've been reading about.

What does share price have to do with AMD being cheap?  I'm being facetious but it's an important point.  Share price means nothing by itself when trying to evaluate value.  AMD can do a 10:1 reverse split and all of a sudden be priced at $36.50 per share with nothing meaningful about their financial condition actually changing.  

It's all about earnings at the end of the day.  Unless you can envision a scenario where they will have earnings down the road that justifies $3.65 per share (or more) then it's not a good buy.  That said, maybe you can make the case.  Just looking at the numbers, it looks like AMD would need to earn $132 million annually to justify their current share price based on a P/E of 20.  That's certainly within the realm of possibility considering their $5.4 Billion in annual sales but that's just my drive by view.  I don't know what else they have going on which could prevent them from turning those sales into profit.

The console news is already long since factored into their share price.  There's nothing there to trade on.  The Bitcoin/Crypto story is another matter but I don't know if that will be enough to meaningfully contribute to their profitability.

I don't like it, and mostly because I think you are looking at AMD for all the wrong reasons.  The notion that AMD is cheap is a false premise and should give you pause.

http://www.xbitlabs.com/news/cpu/display/20131017223319_AMD_Returns_to_Profitability_Thanks_to_Orders_for_Microsoft_Xbox_One_and_Sony_PlayStation_4_Chips.html

http://www.techspot.com/news/54383-amd-turns-a-profit-in-q3-thanks-to-custom-ps4-xbox-one-chips.html


So basically what I'm saying is, this task of making chips is going to continue for years and years. 5+ years.

I read another article (I can't find it) that said that AMD has something in the contract that increases the profit margin on the custom CPU/GPU unit for both consoles that will increase the profit margins from 17% to 20% at a later date.

Not wading into the debate about the stock but as tech support and repair business owner I can tell you that Intel has been killing AMD in the consumer computer business since Intel released the Core Duo processors years ago. AMD processors are only in the low end and Black Friday type computers anymore. Don't get me wrong, I'm not saying their processors are bad or won't work just fine for the average user and I'm not saying they don't make some nice high end processors. What I am saying is they have become the 2nd rate processor company with no hope of regaining much ground in the near future. The Intel i3, i5 and i7 processors are in almost every computer sold over $400-$500. (broad brush I'm painting with but you get the idea)

 

I hope OP'er is correct as I'm sitting on several thousand shares of AMD.

INTC R&D expense is 2x AMD total REVENUE. puts it into perspective...

I've been holding intel stock since it was around $18.  AMD doesn't seem to have much going for them right now and I wouldn't put any money into them.  I like intel as a company, they have lots of potential, plus they a kicking out a nice dividend that I reinvest for more shares.

OP, read about P/E values, and make sure you understand how stocks derive their value.

AMD may well be undervalued, but one thing I have learned the hard way, is:   Cheap stocks are cheap for a reason.

Oddly I don't consider them competition, unlike 20 years ago.

I would be wary. If they are able to turn around their sales you could make a decent amount of $. I bought Nokia at $4.20 while they were loosing money after using one of their Windows Phones. I was up about 45% when I finally sold.

Resistance at 5 thereabouts. Not a buy.

I'm out.  IMO, they are at a local high price, sooo I took some profit.

So, if I would have bought them at $3.65, it would be $4.22 today...

I bet you regret listening to these investing pros replying in this thread.

I spent years worrying about fundamentals and technicals.  Waste of time nowadays IMO.


FUD, propaganda, watching the herd, watching insiders are way more productive in my opinion.

And I will limit my comments to 'trading' vs investing.

YMMV

I did

I bought 130 shares in March.    Within 6-18 months I'm going to be dumping them.  I thought the same as you back in March OP.   I'm going to dump them for dividend paying stocks that I figure will be around in 10 years.

They should have good news for the next few quarters while they are pumping out XBOX and PS4's.   That is mostly what the market thrives on in good times.

If you got them in March then you are probably doing really well on those. :)

That's like the gambling addict saying that he called black 11(luck) .

Until you can articulate the actual reason why a stock moves in price,  you've accomplished nothing in the world of investing,  you're still just gambling. I'm not saying that OP' s thesis was wrong,  it might be spot on,  but you need to confirm that.

Again,  I don't know about AMD because I don't do tech, but it is good food for thought if OP wants to continue to improve in investing.

Yeah, I agree.  In the case of AMD my belief in them as an 'investment' has nothing to do with technical fundamentals.  They are a cyclical company.  Every few decades they "almost die", but come back for another round.  I expect to ride them a few more rounds before I die.

Shit, back down to $3.51

If it goes down much further I might have to buy some.

Just a note here.... in regards to using them for bitcoin mining.... i'd eject, it will cost you more in power than it will payoff to use a video proc anymore...

ASIC chips are where bitcoin mining is at, and even that is getting to be outdated.

Looks like you pretty much covered what I was going to say.

I always feel really fucking smart when I hit a prop bet at the craps table.  

Every stock is at it's current value for a reason.  The key to good investing isn't about hoping for a bigger fool to come along but rather paying a good price for earnings.

Back to the original post, you should consider that they also had a stake in the Xbox 360 and PS3 which both sold tremendously well yet their share price has been downhill since literally two months after the first of those systems launched.

Components for consoles is an EXTREMELY competitive space.  Microsoft and Sony don't leave much money on the table for their vendors to make big profits.  It's super high volume and super low margins.  I wouldn't get too excited about the potential for that to drive AMD back into profitability.

Never forget that they are trading at the price they are today for a reason.  If they continue to drop, it will also be for a reason.  The trades causing these most recent price drops are initiated by people like yourself how likely have far better information than you do.  They know about the XBONE and PS4 so that information is already factored into the price.  You MIGHT do well to buy but you are more likely to get yourself in trouble thinking you know better than everyone else in the market.  

3.41 as of close today OP.     If you were wanting to jump in it's at almost a 2 month low.

That is not advice on my part.  Just an observation.

Was down to 3.30 yesterday, but up to 3.41 again today.

When I saw AMD jump due to earnings I thought of this thread.    4.30 at close today.