The AMD Execution Thread [2007 - 2017]

[overclocked_enthusiasm]

"Mantle was developed in conjunction with game developers to allow them to take better advantage of the capability of AMD's latest graphics cores, resulting in dramatically better performance and power efficiency. Mantle also means the investments developers make to create great content for the Sony and Microsoft consoles translates into optimized experience for all AMD APUs and GPUs moving forward."

This is what confused me on Mantle from Rory on the Q3 CC...

 

[ams]

It would appear that anything said positive about AMD will be met with open hostility from you. These quotes are from the CSO...not me.

Since you are someone who is planning to sink tens of thousands of dollars of investment money in AMD in the equities market, without heavy diversification of investment funds, don't you think you should be asking yourself these same questions? How exactly do you propose AMD will move from 35% to > 50% discrete market share in just a few quarters based on a lineup that is largely just a light refresh of the previous HD 7xxx series, when AMD/ATI have not held that high of a market share since the launch of G80!?!

Is AMD planning to manipulate the market in some way or crater their gross margins to gain discrete market share?

You underestimate the power of semi-custom APUs and the next gen APUs (Kaveri) are clearly superior graphically to Intel integrated...clearly.

Intel has the largest percentage share of integrated graphics, and currently has the fastest integrated graphics too. They are currently the leader in integrated graphics, period.

You are comparing a $700 TI card to a $500 290x...apples to watermelons?

NVIDIA has the largest percentage share of discrete graphics, and currently has the fastest discrete graphics too. They are currently the leader in discrete graphics, period.

Note that the closest competitor to $549 R9 290X in price and performance is the ~ $530 GTX 780 SC editions, but that has no relevance to what we were discussing anyway.

This AMD is not the x86 reject playing second fiddle to Intel and Nvidia...this AMD is carving out a new path via the APU, ARM, and GPU. Just watch...

AMD will be using standard ARM cores for the foreseeable future, while Apple, Samsung, Qualcomm, and NVIDIA will all be using fully custom ARM cores. AMD is years behind and billions of dollars behind these other companies when it comes to investments in ultra mobile computing, and a primary reason for that is their fixation on console computing over the last few years.

Don't get me wrong. AMD is a good company, and not a particularly risky investment at the current valuation levels, but there are some serious questions that need to be answered before blindly throwing money at them in the equities market. It would help if they offered investors a quarterly dividend, but given their cash position and debt obligations, there is probably no chance of that happening.

 

[ams]

I'm well aware. But as I mentioned, this is the same IP set at R9 290.

And so what? R7 260X has the same feature set as the HD 7790 it replaces.

Discrete market share comprises many segments (Channel, DT OEM, Notebook OEM). The product line you are mentioning is not addressing all those segments.

What "product line" are you referring to exactly? The AMD rep clearly said "R7 and R9 series".

Can you explain how AMD would go from 35% to > 50% (!) discrete graphics share in just a few quarters based on R7/R9 cards that are largely a light refresh of the HD 7xxx cards that they replace?

 

[overclocked_enthusiasm]

I am starting to model Q4 revenue and eps. Not sure what asp to use for an uptick in PC business. I am guessing down 3% vs down 10% per IDC and Gartner. Any ideas on PC asp? Typical margin at the lower end? $100 and 25%?

 

[ams]

And for what it's worth, this is not the first time that AMD has predicted huge gains in discrete graphics market share. In 2008, AMD predicted that they would achieve 50% market share by end of 2008, and > 50% market share by 2009: http://www.techpowerup.com/68577/amd-aims-higher-50-market-share-in-discrete-graphics-in-sight.html .

We all know how wrong that turned out to be when looking at the actual discrete market share over time: http://img.techpowerup.org/131030/discrete.jpg

 

[overclocked_enthusiasm]

Don't get me wrong. AMD is a good company, and not a particularly risky investment at the current valuation levels, but there are some serious questions that need to be answered before blindly throwing money at them in the equities market. It would help if they offered investors a quarterly dividend, but given their cash position and debt obligations, there is probably no chance of that happening.

Blindly throwing money at them in the equities market? LMAO Quarterly dividend and they only have $1 billion in cash and just recently returned to a small profit? LOL Do you actively invest? By all means continue enriching your broker with a "diversified mix of investment funds" and I will be the guy heavily margined sinking "tens of thousands" into companies that have a chance to double, triple, quadruple...like P...like F...like ATYT...like AMD.

Lemme know how that 5-8% S & P return on your 401(k) is treating you. For contrarians like me, we buy when there is blood in the streets and AMD is bloodied right now from a pps perspective. The difference between catching a falling knife and catching a company at a low before it catches fire is timing.

"The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values." Warren Buffet

"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." Warren Buffet

 

[silent_guy]

Nothing wrong with quoting Warren Buffet, but I'm sure I could find some quotes from him about 'investors' who trade rapidly in and out of the same stock. Something about the stock market being a casino in the short term etc.

 

[ams]

Blindly throwing money at them in the equities market? LMAO Quarterly dividend and they only have $1 billion in cash and just recently returned to a small profit?

For obvious reasons (as I mentioned earlier), AMD has no hope of offering any dividend due to their precarious cash position. For most investors who are truly "long" (meaning who want to invest in a stock for years and years and years to come), that hurts (assuming that one understands the concepts of compounded interest and dividend reinvesting in the first place). Many big tech companies offer quarterly dividends, including Apple, Qualcomm, Microsoft, Intel, NVIDIA, etc. and a dividend-paying stock from a well established [and potentially] growing company is a very good investment over the long run. Taking dividends out of the equation over the long run makes a HUGE difference. Do the math and you will see.

Warren Buffet

It is hilarious that you mention Warren Buffet because he loves to invest in dividend-paying stocks and he loves to diversify his portfolio. As you said, you are a contrarian investor who could care less about that, so AMD is right up your alley. The issue I have with a mentality like yours is that you are buying AMD stock because you "think" it has a very cheap valuation, when in fact it is valued where it is for good reason.

 

[overclocked_enthusiasm]

Never said I trade rapidly in and out of the same stock...I don't day-trade. I hold 1 quarter at a time and reevaluate after every CC and decide to hold for another quarter or move on. When you have a concentrated position that is the only way to responsibly manage your money. Let's say I had 10-20 stocks instead of just 1. Do you think I would be able to spend 2-3 hours per day on each one like I do AMD? Of course not, and therefore I would have 10-20 stocks I knew little about vs 1 that I can hyper-focus on and PERHAPS connect the dots and anticipate earnings...anticipate moves in the stock...anticipate events that will impact the pps. This is where the doubles and triples lie...

Remember my investment thesis is this...wealth creation = risk...wealth preservation = stability. My stable assets are locked up in my farm to table restaurant that I own/manage, the real estate it sits on, my cars, and my home. My wealth generation monies are always deployed in high beta, typically single digit price stocks, that are misunderstood and hated by the ANALysts and other investors. If I am swimming against the current, I have found that is a promising sign for me...as any contrarian will tell you.

Traditional investors, conservative investors, dividend investors look at me like I have a baby's arm growing out of my head...and that is OK with me. I am batting 13/14 since 1999 and am very happy with my all in, 1 stock, heavily margined strategy, and paying an obscene capital gains tax rate. I like to keep things simple, and for me watching/investing in 1 stock does that for me. It's not for everyone and I appreciate that...just don't dismiss the validity of it out of hand.

 

[ams]

Fair enough. There is certainly nothing wrong with focusing on a certain stock, but if one spends too much time analyzing any one stock, then it can really consume their time and consume their thoughts and lead to emotions that get in the way of investing with a crystal clear head. My philosophy is to enjoy technology as much as possible from a consumer standpoint, but to distance myself a little bit when it comes to evaluating technology companies from an investment standpoint. It is my experience that all companies make big claims, and many of these claims cannot be easily backed up. Dividend investing is (usually) really great over long periods of time due to compounded interest, dividends reinvested, and long-term growth in share price. To each his own.

 

[overclocked_enthusiasm]

The issue I have with a mentality like yours is that you are buying AMD stock because you "think" it has a very cheap valuation, when in fact it is valued where it is for good reason.

This hits the nail on the head. AMD is currently valued where it is because of where it has been...not where it is going. You don't see it...I do. I don't "think" it's cheap...my due diligence tells me I "know" it's cheap. You want confirmation AMD is a good buy? Wait like everyone else and you will be part of the momo guys and shorts covering who will push it higher.

When I started buying at $3.15 on October 23 (the day of a 6 month low I might add), the RSI was 30, the chart was in shambles with the 20, 50, and 200 MAs shattered...all things I salivate over. I bought it for a quick scalp, a technical bounce, but thought I would dig into the data a little since I was already here. I was a big tech investor back in 1999-2006 (AMD, ATYT, NVDA, INTC) and the more I found the more I liked. Now that I am more educated on the tech, the business model, the management team and the market conditions, I have changed my "short term scalp" into a fully vested long position to be reevaluated every quarter...just like I have always done...based largely on semi-custom, APU, and ARM. Throw in a less than forecasted 10% drop in PC, some incremental embedded revenue, stronger than expected console sales, and strong GPU sales (digital currency or not related)...what's not to like for Q4 earnings?

With 131,000,000 of 764,000,000 shares currently short AMD, any meaningful share appreciation to the upside will see an explosive short covering rally like I experienced in Pandora earlier this year. This is a hard list to compile:

1. Broken chart
2. Universally despised
3. Heavily shorted
4. Silver lining (products, change in business model, stable revenue stream, return to profitability)

http://stockcharts.com/h-sc/ui?s=AMD&p=D&yr=1&mn=2&dy=0&id=p95588900142

 

[silent_guy]

Not saying that technical analysis or fast trading is bad, plenty of people seem to be able to make money out of it. And I've done plenty of short term trades in the past. But I'm sure that Warren Buffer considers a couple of quarters still casino territory, and that MMA and chart wizardry are furthest thing from his mind when making his typical investments that have a 10y horizon.

Again, nothing wrong with doing short term stuff, but don't delude yourself.

 

[no-X]

And so what? R7 260X has the same feature set as the HD 7790 it replaces.

No. Hint: TrueAudio

 

[Kaotik]

No. Hint: TrueAudio

7790, hardware wise, can get TrueAudio, it's up to AMD if they enable it or not.

 

[swaaye]

Did you even read the context of this thread? Rebrands and light refreshes are a fact of life in the GPU world, but going from 35% to > 50% discrete graphics market share based on a new lineup that is largely just a light refresh of the previous lineup doesn't make too much sense.

Are we assuming that even most hardcore gamers know or care about those details, or are even capable of comprehending the meaning of that info?

 

[Alexko]

And how exactly will that happen when R7/R9 are virtually the same architecture as HD 7xxx other than higher end R9 290? When the competitive landscape changes starting in March 2014 with the launch of GTX 8xx series, will AMD be able to keep increasing discrete graphics share? Does AMD intend to crater their gross margins in order to increase discrete graphics share? Time will tell.

Market share is mostly determined at the lower end of the market. I can think of four possible ways for AMD to make improvements in this area:

• Mantle: over 15 games have already been announced with Mantle support, and the closed beta hasn't even opened yet, not to mention the final version. This suggests strong support from developers, and it should have a noticeable impact on benchmarks.
  
• AMD has introduced a new version of Crossfire with the 290(X), and supposedly this will be supported by Kaveri as well. Meanwhile, frame pacing is finally here, if not quite complete yet; but I expect it will be by the end of H1'14 at the latest. So it's possible that AMD has finally got Dual Graphics working right, which could be a very enticing proposition for notebook OEMs, as a Kaveri + Cape Verde setup should be able to punch way over its weight, especially in Mantle-enabled games. This could potentially be a pretty big deal, but it will be limited to machines with AMD APUs, so probably less than 30% of the market.
  
• New ASICs are possible. NVIDIA is supposedly releasing the first iteration of Maxwell in late Q1'14, but just because we haven't heard anything from AMD doesn't mean they're sitting idle.
  
• And sometimes, it makes strategic sense to sacrifice margins a bit in exchange for market share. When you're trying to push a new API is one such instance.

 

[no-X]

7790, hardware wise, can get TrueAudio, it's up to AMD if they enable it or not.

I don't think so. If AMD used GPUs with deffective TrueAudio circuity (also), they could't enable it.

 

[Kaotik]

I don't think so. If AMD used GPUs with deffective TrueAudio circuity (also), they could't enable it.

What would suggest they used GPUs with defective TrueAudio circuitry on 7790?
It's same Bonaire on both, no new revision or some such (AFAIK)

 

[entity279]

There's little chance that's the case, the TrueAudio DSP doesn't seem to be a good target for manufacturing defects

 

[no-X]

What would suggest they used GPUs with defective TrueAudio circuitry on 7790?
It's same Bonaire on both, no new revision or some such (AFAIK)

Random defects aren't related to GPU revision. TrueAudio isn't official part of HD 7790's feature set, so AMD could sell Bonaire GPUs with defective TrueAudio block. Even single- or double-digit numbers of such GPUs on market would prevent AMD from enabling this functionality later.