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Good day subscribers thank you so much for joining me today i am jeremy and this is a financial education channel in today we’re talking amd stockin is amd stock of i will i be buying amd stock this is one of the most highly requested videos from you guys in the comments section it is simply unbelievable how many times it has been requested within the last like
Let’s say month or two how many times you guys have requested about amd asking questions about amd so you know what i thought i would just give the people what they want we’ll do an amd video hunstanton for all guys so we’re going to find out if i’m going to be buying amd stock at the end of this video i cannot wait to share this with you guys hit a thumbs up if
You enjoy let’s get into this song first off holy smokers are you freaking kidding me with this amd of four hundred and seventy percent in the past year one year change four hundred and seventy percent that’s freaking disgusting holy smokes alright so what is this amd but we are a global semiconductor company by the way i’m in the 10k section of the amd investor
Relations page in their annual report we are a global semiconductor company primarily offering x86 microprocessors as a standalone devices or incorporate it into accelerated processing unit 80 use chipsets discrete graphic processing chips gpus and professional graphics a little more into what they do they a cpu just so you guys know it’s like the brain of brain
Of any type of computer or something like that guys it’s basically the brain of a human read through there if you want on what a cpu is but just think of it as the brain of a device a brain of a laptop the brain of a pc something like that and then a gpu is basically anything that has to do with the graphics of it a gpu is a program programmable logic chip that
Renders images animations and video into increasingly being used to handle general computing tasks gpus are located in plug-in cards in a discrete processor so that is the main business that they’re in cpus which is basically the brain of it gpus which controls all the graphics they could go into like a pc or something like that guys or gaming system those kinds of
Things so that is them that is where their business step now they’re into some different things here they are they’re under the desktop which is the product is biggest business there are notebooks two and one some of those things you know that it’s like a tablet one minute and then you could turn into a laptop they do chipsets they’re into the commercial sector
In the graphics market and also so the majority of their customers or excuse me the major customers for them or sony microsoft in hp all three of those companies or basically beyond ten percent of their revenues they get at least ten percent of revenue from each of those customers so they’re getting a minimum of 30 plus percent of their business from sony from
Microsoft and from hp now it’s probably closer with 50 60 70 percent guys because the majority of our product comes from those three those three companies are selling into it would make sense because one there in the sony playstation as you can see here the sony playstation this is the teardown on sony playstation 4 the they use the amd jaguar cores and amd radeon
Gpus so they use both those chips up and the xbox 360 here guys or excuse me the xbox one this is also their break down and they use the jaguar 8 core cpu in an amd radeon graphics gpu so and then obviously hp on the side hp is probably the biggest pc or willy’s one of the biggest pc companies out there so it’s kind of natural for amd to get the majority of their
Revenue from those three companies so there is diversified for a you know example there so here’s what it’s go over some risk factors if you’re investing in amd stock and some of the negatives on amd stock this is their first risk factor they put up in their annual report intel corporation is dominant on the microprocessor market in its aggressive business practice
Practices may limit our ability to compete effectively intel corporation has been the market share leader for micro processors for many years decade two decades plus intel’s market share margins and significant financial resources enable it to market its products aggressively to target our core customers and channel partners were special and this incentive and to
Influence customers to do business with us these aggressive activities have in the past and are likely to in the future result in lower unit sales and lower average failing prices for many of the products so basically what does that paragraph me it’s basically andy saying that intel super aggressive with pricing because they have so much scale intel has so much
Steel that they can cut prices pretty low and if amd wants to try to win a customer away from intel right you need to come in at such a low price point that they end up either losing money or not making nearly the margin they are that’s why amd has been unprofitable year after year which we’ll look at their income statement there like unprofitable of like a long
Long time guys at least the last five years that’s what i looked into i wouldn’t be surprised they’ve been unprofitable for 10 15 20 years and the question is can they ever get to a profitable place as long as intel’s the dominant leader they’re guys because intel can just say oh we’ll charge you you know three dollars a chip or whatever and you know then amd gee
I come in okay we’ll do 250 and then amd’s hardly making any profit guys so it’s a tough tough business for amd so some other things that are going bad for amd globally sales in 2016 this is pc sales we’re down 6.2 percent to 269 million unit shipments so basically it’s been five consecutive years that pc sales are down pc sales are down they’re going to continue
To probably go down they’re probably never going to recover guys as eventually it’ll be 200 million units and it’ll be 150 million units a year that 100 million units so the pie is getting smaller and smaller than for pcs which is andy’s core market at the moment so that’s something to take into account also amd has completely missed out on the mobile revolution
As pretty much nvidia has though both those companies have completely missed out they’re not an ipad they’re not an iphone and the samsung devices and what you have is a situation that when ipads become so or you know when ipads become so i guess you say advanced where you don’t need a pc to use it anymore that’s going to be even a worse thing for pcs currently
I use my ipad or my iphone or whatever smartphone if i have the samsung is using the samsung for the majority of my computing for the majority of my computing and right now i use my macbook macbook i bought last year i use that for like editing videos and things like that and that’s what i currently use now when probably the next generation ipad comes out it’s
Going to be so powerful that i will not even need to use my macbook about it anymore which will completely eliminate the need for me personally to ever use pcs again i want because i can do everything photography videography related on my phone or on an ipad because it’s so powerful and it’s so intuitive at that point the reason i haven’t yet is because it’s not
Intuitive enough and not powerful enough when that happens guys it’s going to be even a worse thing for pc sales and this is another reason why pc sales are declining and will continue to decline because everybody’s got their computer it’s been and it’s this this is the computers people are using in the future so that’s kind of some trouble there so then we look
At the vr market and this has to do with gaming side of things now we’re looking at the gaming side because that’s the other biggest part the amd plays in right well a lot of the vr type gaming and vr experience is going through the phone and the phone is something amd’s not in so that’s some of the trouble and then we look at the oculus rift which is a gaming
System owned by facebook and i could not find anywhere in the chip breakdown that amd is in the oculus rift if you guys could please look into that if you know it maybe they are in it i cannot find anywhere that they are innocuous rep so they might be missing out on vr gaming as well which would be they missed out on the mobile revolution and possibly miss out on
The vr revolution i don’t know i would love to see you guys if you know that maybe they are an oculus but from my understanding they are not could not find anywhere on the chipsets that they are in that then you take into account the mobile gaming revolution this is taking people’s time people only have so much time to gain right they only have so much time for
Entertainment for gaming for anything right so mobile gaming is huge and it’s getting bigger and bigger and bigger and companies are realizing how powerful mobile gaming is how much money there is to be made on mobile gaming ione came digital for a long time king king digital stock he owned the candy crush and candy crush soda saga games and all those kind of games
Farmville nut farm belts using farm heroes some of those kind of games right well that company was extremely profitable they’re making and they were making like 200 million dollars a year actually they were making over four hundred million dollars excuse me i forgot how much they really make it they’re making over four hundred million dollar profit profit per year
Profit supercell though because the company that’s behind the classic lands in clash royale and boom beach in those games that company is supposed to be making over 600 million dollars in net income per year supposedly we don’t know there’s a private company but for my from what i’ve heard they’re making over 600 million dollars per year so you’re going to have
Game designers focusing around mobile because i think a lot of places i think a lot of places want a piece of that pie guys when you have king digital making 400 million plus a year net income we have companies like a supercell making 600 plus million dollars per year in net income and you have a lot of other smaller game makers making 50 100 million dollars net
Income per year guys it’s a pretty profitable business so and all those all those games are played on here and they’re played on here guys so that’s another segment of the market that amd is missing out on here guys so some things to take into account as far as a negative show with amd know as far as amd’s net revenue so it’s 2014 they did five point five billion
Dollars in that revenue then they dropped all the way down to three point nine billion dollars a drastic drop there to 2015 and then last year they recovered a bit and up to four point two so revenue is going in the right direction so that’s a good sign or gross margin the line two lines under there you look at that and gross margin actually went down last year
Despite them having 300 plus million dollars more in revenue it’s a very bad sign then we go down there and we look toward the bottom we see net loss they lost around just under 500 million dollars last year the year before they lost 660 million dollars year before that they lost four hundred million dollars so this is a serial company of losing money they lose
Money year after year after year looking at their balance sheet now catching cash equivalents of 1.2 billion and doesn’t look like they have much for an investment not much for short term debt they do have long term debt of about 1.3 billion which basically cancels out the cash i look at amd and this is absolutely absolutely not a stock i would invest in personally
That doesn’t mean you can that doesn’t mean you can’t make money in it you know just because jeremy doesn’t want to be in that doesn’t mean the stock boy go up another 500 percent next year who knows personally i no way i would invest in this company they’re missing on the mobile revolution they’re probably going to miss out on the vr revolution unless they do
Something huge with oculus rift and some of those kinds of things that are kind of getting out in that gaming forefront and pc sales one of the main parts of business is declining year after year after year and you have game makers now for the playstation 2 xbox the game makers they want to charge for you to even get online which is why i’ve never bought any other
Playstation or i won’t ever be in the future and all my friends are in as well because we don’t want to pay 50 whatever dollars a month it is plus now games are like 60 65 bucks for a brand new game it it is absolutely ridiculous the prices are charging so i don’t personally have time to play mobile games but what i did have time i would play mobile games over
My playstation 3 because it was like cheaper it was a straight up but it’s cheaper and it was actually more fun to me to play clash of clans and some of those games than it was to actually play call of duty so i’m looking at things here in does this mean the end for amd probably not can they do some things to maybe recover maybe but when i look at a company that
Loses money every single year when are they going to turn around if they maybe just lost money one you or maybe two years then maybe you can say okay now they’re going to turn it around but when they lose money year after year after year after year after year all the way you can look way back and the revenues have i mean the revenue recovered a bit last year but
They’re still down 1.3 billion dollars from what they did in 2004 that 2014 they’re still down 1.3 billion dollars from what they did in 2014 guys so and then their balance sheet is just out okay down sheet they got more depth and they have cash so why would i want to be an amd stock and it’s gone up 500% last year that it’s no reason for me to be in a stock that
Loses money that doesn’t have a great balance sheet that has a bunch of products that are in decline a bunch of cyclical products that are in decline makes no sense for me to be an amd whatsoever however i know how you guys are in amd stock so you know they don’t hate me for this video but i got to be straight up with you i mean it’s not a stock i’m interesting
Whatsoever so that’s fine but anyways i hope you guys enjoyed this day unless your name be sure holder i’m sure you move on if you want to give me a thumbs down that’s fine but no i would seriously love if you guys in the comment section if you are an amd shareholder if you could please share your opinion on amd and while you’re bullish on it because i would love
To hear i’m obviously very bearish on the stock i would love to hear a bullish point of view and why you’re excited for the stock and why the stock you know the revenues can recover why they can get back to profitability what’s the realistic scenario for that and those kinds of things i would love to hear from you guys or welcome all points of view if you just
Came across this channel you may want to subscribe we talked personal finances channel we talked entrepreneurship i’m an actual business owner we talk to stock markets the most of everything including breaking down stocks every once in a while and telling you it i would buy them thank you for watching guys and have a great day you
Transcribed from video
Is AMD Stock a Buy? By Financial Education
