Advanced Micro Devices Inc (NASDAQ:AMD) And The Tech Industry Prospect For 2018
Advanced Micro Devices Inc (NASDAQ:AMD), is a US$10.20B large-cap, which operates in the tech hardware industry based in United States. Technology has become a vital component of every industry, bringing unprecedented opportunities for growth, along with challenges and competition. Tech analysts are forecasting for the entire hardware tech industry, a strong double-digit growth of 27.83% in the upcoming year , and an enormous growth of 60.04% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether Advanced Micro Devices is lagging or leading in the industry. Check out our latest analysis for Advanced Micro Devices
What’s the catalyst for Advanced Micro Devices’s sector growth?
The battle for competitive advantage has led businesses to adopt new the cutting-edge technology, or risk being left behind. Many technologies are now coming into their own as their power and speed increase and the cost of delivering them goes down. And some are pursing growth through various strategies including new M&A, collaboration and alliances, as well as cost reduction and organic growth. In the past year, the industry delivered growth in the twenties, beating the US market growth of 11.54%. Advanced Micro Devices leads the pack with its impressive industry-beating growth rate of of over 100% in the upcoming year.
Is Advanced Micro Devices and the sector relatively cheap?
The tech hardware sector’s PE is currently hovering around 25.97x, above the broader US stock market PE of 18.35x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 12.20% on equities compared to the market’s 10.60%. On the stock-level, Advanced Micro Devices is trading at a higher PE ratio of 233x, making it more expensive than the average tech stock. In terms of returns, Advanced Micro Devices generated 7.04% in the past year, which is 5.16% below the tech sector.
Next Steps:
Advanced Micro Devices’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If Advanced Micro Devices has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other tech companies. However, before you make a decision on the stock, I suggest you look at Advanced Micro Devices’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has AMD’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Advanced Micro Devices? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
