SNOW SHOVELS IN JULY

(AMD), (INTC), (NVDA)

You know you're getting old when you can remember Advanced Micro Devices (AMD) back when they were the scrappy underdog making Intel-compatible chips in Austin, Texas. 

Back in my early trading days in the '80s, I watched AMD engineers reverse-engineer Intel's (INTC) latest processors with the dedication of medieval monks copying manuscripts.

Fast forward to today, and AMD's stock just got the kind of beating usually reserved for tech companies that forget to mention "AI" in their earnings calls. 

We're talking about a drop from $227 to around $107 - a painful 53% decline that's enough to make even the most hardened tech trader wince.

The million-dollar question floating around my Lake Tahoe office this week: “Has the market lost its mind, or is this the kind of opportunity that makes careers?”

Let me break this down for you, and trust me, it gets interesting.

First, let's address the elephant in the server room - why was AMD trading at $227 in the first place? Simple: AI fever. 

The same fever that had people buying pet rocks in the '70s and crypto tokens named after dogs in 2021. Expectations got so far ahead of reality that they were practically in a different zip code.

But here's where it gets juicy - AMD's data center revenue just surged 69% year-over-year to $3.9 billion in Q4. That's not a typo, and it's definitely not the kind of number you see from a company that's supposedly lost its mojo. 

The division now accounts for 50% of 2024 sales, up from about as much as a rounding error a few years ago.

Speaking of numbers that make you do a double-take, AMD's forward P/E ratio has crashed from the nosebleed level of 40-50 last year to below 18 now. 

The last time I saw a multiple compression this dramatic, I was watching the air leave my daughter’s birthday bouncy castle.

Still, here's something the doom-and-gloom crowd isn't telling you: AMD's pulling forward production of their MI350 series to mid-2025 due to strong customer demand. 

When a company accelerates production in this environment, it's like seeing a restaurant with a line around the block - something good is cooking inside.

Sure, AMD's got challenges. Their AI GPU sales expectations for 2025 got trimmed back faster than my hedge during spring cleaning. The software side needs work - they're playing catch-up to NVIDIA (NVDA) in the AI space like I used to chase after my kids at Disneyland. 

But here's the kicker: AMD's total data center sales could still hit $15-16 billion this year.

The client segment isn't exactly sitting on its hands either, posting a 52% year-over-year growth rate. We're looking at potential sales of $32-33 billion this year, possibly ramping up to $40-42 billion in 2026. 

Now, am I saying AMD is risk-free? About as much as my morning coffee is calorie-free. 

Obviously, they're facing serious competition from NVIDIA in AI and need to keep Intel at bay in traditional computing. 

But at these prices? It's like finding a Ferrari with a Honda Civic price tag just because it needs new tires.

Looking ahead to 2030, I can see AMD's stock hitting $500 or higher. That's not just optimism talking - that's looking at the numbers and seeing a company trading at a modest 25-27 forward P/E multiple with substantial growth ahead.

For those tracking this stock, AMD reported in-line EPS of $1.09 on $7.7 billion in sales - a 24% year-over-year increase that beat expectations by $170 million. 

Q1 guidance came in at $7.1 billion, above the Street's $6.99 billion estimate. Those aren't the numbers of a company in trouble; they're the numbers of a company in transition.

Is AMD oversold? The technicals certainly suggest so. The stock is about 33% below its 200-day moving average, which in technical analysis terms is like finding yourself in Death Valley when you meant to drive to San Francisco. 

The RSI has stopped making new lows relative to the stock price - often a sign that the smart money is quietly accumulating positions.

The bottom line? AMD at $107 looks about as overvalued as a snow shovel in July. Sure, there might be more volatility ahead - this is tech, after all, not a savings bond. 

But for those willing to look past the next quarter or two, AMD could be setting up for one of those moves that people talk about at investment conferences for years to come.

As for me, I'm heading back to Lake Tahoe this weekend. There's something about the clear mountain air that helps put market volatility in perspective. 

That, and I hear there's a tech conference in Reno where a certain CPU maker might be making some interesting announcements.

Remember, in Silicon Valley, today's underdog is tomorrow's top dog. Just ask the folks who sold their AMD shares in 2015 for $2.

Be on the lookout for developments - this semiconductor story has more chapters ahead.