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Thread: AMD going up?

  1. Default AMD going up?

    I'm no expert, but let's just look at the basics. AMD has a current P/E ratio of 256, while Intel, it's main competetor, has a P/E of 19. The forward P/E for AMD is 64, meaning that if you factor in analysts expectations for growth over the next 12 months, there is still a very high P/E compared to Intel. (Intel's forward P/E is 18 ). EPS are 0.10 vs. 1.34 for AMD and Intel, respectively. Intel gives a dividend of 0.32 per share, while AMD has none.

  2. Default

    So, you are right in that the analysts numbers seem to indicate that indeed AMD will continue to grow and cut into Intel's market share, as evidenced by the fact that the forward P/E is much lower than the current P/E (while the forward P/E of Intel is unchanged). However, the ratio is so high that you have to think that this has already been factored into the current stock price.

  3. Default

    Is that to say that AMD won't go up more? Of course, no one can predict. And in fact there are intangibles that Cramer talks about in his book that may lead you to have more confidence in this stock than the numbers indicate. But for me, that P/E means there isn't likely a lot of room on the upside for this stock, at least in the near future.

    Just my $0.02. Anyone else have a different take?

  4. Default

    You are absolutely right, but I think in the short term the buzz factor of chip makers being at capacity may make you a buck or two. In fact both are up about 2% today. But in the medium term, I totally agree with you. In the long term, both companies will increase production capabilities, but who knows where demand will be at that point.

  5. Default

    I think demand will only go up, because of world wide increases in computer purchases, but one had better be the patient type to get in now and wait for all that to go down. Also think Intel's Centrino is hot and not sure how AMD will handle that competition, in the short or long term. Lawsuits will only take them so far... one good thing about chips is that they are hard to pirate and sell, unlike software, which makes me avoid MSFT like the plague.

  6. Default

    I read somewhere that part of the reason AMD is up and taking market share is because Intel hit capacity this season. I also think the Intel Centrino is preferred by most, and I think Intel can get that market share back as they increase production capabilities, which of course they will do. And again, I can't ignore those P/E ratios. For my money, Intel's the better odds long term.

  7. Default

    Just wanted to add that I still think AMD can do well with sales, in the long term, because they have lower cost chips and that does matter in developing nations. I think they are both better than a software or other type of computer company, but they have to get production up and that is going to take some time. Supply and demand are the names of the game, too much of one or the other and you have a problem.

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