After impressive performances in 2019, 2020 and 2021, Advanced Micro Devices (NASDAQ:AMD) stock is in a rut this year.
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Despite blow-out results for Q4 and full-year 2021, followed by a big analyst upgrade, AMD stock is down 21% so far in 2022. At this point, shares are off their 2021 all-time high close of $161.91 by more than 25%.
Some investors are taking a wait-and-see approach to see if this downward trajectory continues. Others see the discounted price on such a high performance stock as a buying opportunity that doesn’t come around very often.
So which is it?
From my perspective, AMD stock may not be able to pull off a repeat of the gains seen over the past three years. Stocks (especially tech stocks) showing that kind of performance so far in 2022 are rare. The company faces challenges, including resurgent competition. There are also big-picture economic issues, including inflation and interest rates. Supply chain problems continue, including semiconductor shortages.
However, as you’ll see, Advanced Micro Devices is a company that is positioned to impress in 2022.
AMD Stock: A Closer Look at Earnings
Based on the trajectory of AMD stock since last November, you’d be forgiven for thinking that this is a company that’s struggling. On Feb. 1, AMD reported its fourth quarter and full-year 2021 results. No struggle here, the numbers show a company that is performing admirably.
AMD reported record quarterly revenue that was up 49% year-over-year. Full-year revenue was another record-setter, up 68% YoY. Data center revenue doubled YoY. Margins were up, and earnings were 92 cents per share compared to earings-per-share of 52 cents the year before.
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The company repurchased $1.8 billion in stock during the year and finished 2021 with $3.6 billion in cash, cash equivalents and short-term investments. The icing on the cake was guidance for 2022 revenue of $21.5 billion. That’s a 31% increase over 2021, which handily beat analyst projections.
AMD stock popped on the news, but the rally was short lived. Over the past several days AMD has been sliding again.
AMD Gets Analyst Upgrade
Need another reason to be bullish about Advanced Micro Devices stock? Last week, Daiwa Capital Markets analyst Louis Miscioscia upgraded the stock to “buy” from “outperform.” In particular, Miscioscia cited the company’s strong growth in the enterprise market.
Demand for AMD’s EPYC servers to power cloud computing is increasing and offers considerable long-term growth potential. It’s worth noting that those EPYC servers are a more lucrative business than most desktop and laptop CPUs.
Bottom Line on AMD Stock
Here’s yet another argument in favor of snapping up AMD shares. Data just dropped for fourth quarter 2021 computer processor sales. It shows that AMD’s share of the x86 CPU market hit 25.6% in the quarter. That’s the highest level AMD has held in 15 years. In addition, the report showed that AMD’s server CPU market share notched its 11th straight quarter of growth.
An investment in this company allows you to benefit from some of the hottest ongoing tech trends, including: a PC industry that has kicked back into growth mode after years of decline, growing popularity of PC gaming, an apparently insatiable demand for next-gen game consoles (you’ll find AMD inside both the PlayStation 5 and the Xbox Series X), and an ongoing surge in demand for cloud computing.
Let’s not forget crypto mining, either. Yes, the crypto market is incredibly volatile, but it’s not about to disappear. And when the value of crypto currencies is up, so is the demand for graphics cards like AMD’s Radeon series.
AMD stock currently earns a “B” rating in Portfolio Grader. If you’re looking for a discounted tech stock to add to your growth-focused portfolio, Advanced Micro Devices shares are tough to resist.
On the date of publication, Louis Navellier had a long position in AMD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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