This may be a stupid question, but I don't understand why AMD and Nvidia are seen as having so much potential. They only design chips, they don't produce them. Where is the moat? Alphabet, Amazon etc. are still buying chips in large quantities. However, they are already working on their own chips, so they are turning from customers into competitors (at least in certain areas).
Chips will increasingly become commodities, especially when large companies can develop the chips themselves thanks to AI.
AMD may be better at inferences than Nvidia, but why shouldn't Nvidia be able to catch up with all the financial resources. We are still at the beginning of AI chip developments.
They are not really turning into competitors to AMD and Nvidia. First of all, the CEOs of AMD and NVIDIA are family, literally related, so insider information is a real thing and anyone denying it just shows how naive people can be.
Secondly both of these companies have built a very good company culture in designing quality products (Think 70's businessmen with access to pure cocaine), they own manufacturing plants and the best talents on this. Any competitors like Alphabet will be forced to rely on them one way or another from manufacturing, technology ideas, to people.
This is a real monopoly that is lead but the Asian continent, USA is trying to have Intel on its side but so far its been mostly failures.
Getting back to the point, the companies you mentioned might produce competition but it would still mean relying on these giants.
AMD has been trading at 52 P/E since 2017ish rightly so with 50% growth rate.
It is projected to grow 40% annually in the next 5 years. One will lose money if it trades at 7.5 P/E in 5 years. Things really need to get ugly for that to happen.
It currently trades at 106 P/E (GAAP) with NTM PE of 26 (Non GAAP). When you have negative net debt, you can fight off lots of ugly.
Analysts (50 of them) are able to project this company pretty accurately since Lady Su became the CEO in 2014. Seems like "asymmetric risk" type of bet.
Gracias por tu análisis Antonio. Da gusto como profundizas en los temas. Enhorabuena por tu disciplina
Thank you for the article.
This may be a stupid question, but I don't understand why AMD and Nvidia are seen as having so much potential. They only design chips, they don't produce them. Where is the moat? Alphabet, Amazon etc. are still buying chips in large quantities. However, they are already working on their own chips, so they are turning from customers into competitors (at least in certain areas).
Chips will increasingly become commodities, especially when large companies can develop the chips themselves thanks to AI.
AMD may be better at inferences than Nvidia, but why shouldn't Nvidia be able to catch up with all the financial resources. We are still at the beginning of AI chip developments.
Where is the moat for AMD?
Thank you.
They are not really turning into competitors to AMD and Nvidia. First of all, the CEOs of AMD and NVIDIA are family, literally related, so insider information is a real thing and anyone denying it just shows how naive people can be.
Secondly both of these companies have built a very good company culture in designing quality products (Think 70's businessmen with access to pure cocaine), they own manufacturing plants and the best talents on this. Any competitors like Alphabet will be forced to rely on them one way or another from manufacturing, technology ideas, to people.
This is a real monopoly that is lead but the Asian continent, USA is trying to have Intel on its side but so far its been mostly failures.
Getting back to the point, the companies you mentioned might produce competition but it would still mean relying on these giants.
Thank you for taking the time to explain 😊
Nice write up, thanks!
AMD has been trading at 52 P/E since 2017ish rightly so with 50% growth rate.
It is projected to grow 40% annually in the next 5 years. One will lose money if it trades at 7.5 P/E in 5 years. Things really need to get ugly for that to happen.
It currently trades at 106 P/E (GAAP) with NTM PE of 26 (Non GAAP). When you have negative net debt, you can fight off lots of ugly.
Analysts (50 of them) are able to project this company pretty accurately since Lady Su became the CEO in 2014. Seems like "asymmetric risk" type of bet.