No enterprise wants to be dependent on a single supplier and in a world of booming demand for all things AI this is creating a massive opportunity for another semiconductor giant, Advanced Micro Devices, whose CEO, Dr Lisa Su, by an extraordinary coincidence is related to Jensen Huang, CEO and co-founder of Nvidia.
The chart does not yet show the explosive power of the Nvidia chart but it has just given a ‘double whammy’ buy signal and I have great faith in Lisa Su as a leader. AMD has been transformed since her arrival. The shares have been struggling because of excess inventories in the semiconductor industry which also hit Nvidia but these inventories are fast clearing and better times lie ahead even without the extraordinary boom in AI and data centre related demand.
There is nothing like the sales explosion taking place at AMD that is happening with Nvidia although they do expect a better second half. However they are in the hunt.
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Still Early Days in the AI Era
We are in the very early stages of the AI computing era, and the rate of adoption and growth is faster than any other technology in recent history. And as the recent interest in generative AI highlights, bringing the benefits of large language models and other AI capabilities to cloud, edge, and endpoints requires significant increases in compute performance.
AMD is very well-positioned to capitalize on this increased demand to compute based on our broad portfolio of high-performance and adaptive compute engines, the deep relationships we have established with customers across a diverse set of large markets, and our expanding software capabilities. We are very excited about our opportunity in AI. This is our No. 1 strategic priority, and we are engaging deeply across our customer set to bring joint solutions to the market, led by our upcoming Instinct MI300 GPUs, Ryzen 7040 Series CPUs with Ryzen AI, Zynq UltraScale+ MPSoCs, LVO V70 data centre inference accelerators and Versal AI adaptive data centre and edge SoCs [systems on chips].Dr Lisa Su, CEO, Advanced Micro Devices, Q1 2023, 2 May 2023
The chart shows vividly how the world changed for semiconductor companies around 2015. You see exactly the same phenomenon on the Nvidia chart.
So what happened in 2015. In typical counter-intuitive fashion it was a difficult year for the industry.
Whereas 2014 was a year of broad-based strength and growth, the market downturn last year left few markets unscathed. Semiconductor revenues for data processing, wired communications and consumer electronics all declined. Automotive electronics and industrial electronics grew less than 1 percent, while wireless communications — the strongest growth area — only grew 3 percent. Semiconductor revenues in all regions of the world declined, and all seven of the major semiconductor segments (i.e., memory integrated circuits (ICs), microcomponents, logic ICs, analog ICs, discrete components, optical components and sensors) experienced revenue declines from 2014 to 2015. In fact, out of 128 semiconductor segments and sub-segments tracked by IHS, 89 declined. Combined, these 89 segments accounted for over 77 percent of semiconductor revenues in 2015.BusinessWire, 4 April 2016
I found this comment on Yahoo Finance highlighting what makes AMD exciting.
Blown Away by AMD’s AI Plans
AMD (AMD) CEO Dr. Lisa Su blew me away when she described what’s next with her company’s own generative AI chips.Brian Sozzi, Morning Brief, Yahoo Finance, 14 July 2023
Below are some quotes from that interview.
AI is the defining mega trend in technology…..GPUs are really hard to build…Our latest GPU has 153bn transistors…..AI chips and the data centre is around a $30bn market today. We expect this to grow by 50pc a year over the next three or four years to become a $150bn market and it plays to our strengths.
We are very excited by what we see from our customers who are ramping and ramping quickly. We are building the software it needs as well as the software chain.
The demand for AI is there and there are very few companies that have this technology.
We view this as an opportunity not just to be a CPU player but to be an overall data centre system provider.
We have to practice responsible AI. The power of the technology is so great that we need to really embrace it.
Our strategy that we have been working on for the last few years is really coming together.Dr Lisa Su, CEO, Advanced Micro Devices, being interviewed on Morning Brief, 14 July 2023
Strategy – AMD a Good Choice for a Portfolio
If you are really going for it Nvidia seems to me to be a better choice than lookalike Advanced Micro Devices but for a portfolio they do deserve a place. List Su is formidable and her comments on the outlook for AI and AMD’s place in the tech revolution make the shares well worth buying.
Advanced Micro Devices. AMD. Buy @ $116
And now for something completely different.
Ferrari Roars off the Grid
This is a great chart for a great company. It is important to remember that although it makes cars Ferrari has more in common with a luxury goods company like Hermes than a car company like General Motors or Volkswagen.
The brand value is spectacular. Buy a Ferrari and you are instantly a member of a glamorous and incredibly elitist club, if you are the sort of sad individual who values such things. I don’t have a Ferrari but would like one so obviously I am. I do have my 30 year old classic Mercedes-Benz convertible though which has been restored to blooming health and to me and is my pride and joy. I definitely feel like the man when I am driving that one and looking at the natives of Saffron Walden as they doff their caps while I roar past in a cloud of exhaust fumes (in my imagination, they don’t give a stuff, I know).
Ferrari is a sensationally profitable business.
In particular, revenues came in at €1,4bn (up 20pc); adjusted EBITDA at €537m; and adjusted EBIT at €385m, with remarkable percentage margins at 36 — 37.6pc and 26.9pc respectively; adjusted net profit at €297m, with an adjusted net profit margin of 21pc; and finally strong industrial free cash flowFerrari, Q1 2023, 4 May 2023
There is plenty of exciting stuff happening at Ferrari.
In particular, I would like to comment on two elements extremely important for our further growth: the building — the e-building and our differentiated product offering. Let’s start with the e-building. It grows taller and taller every day we come to office. This will be the home of our internally developed strategic electric components and it will grant us a higher degree of production flexibility for our hybrid and full electric models.
And now the differentiated product offering. Today, it includes ICE and hybrids whose deliveries’ weight doubled in the quarter reaching 35pc. Moreover, in line with plans, we will soon add to the family our full electric model tailored to address our current client needs. As we have done throughout our history, we will exploit new technologies to the utmost to enhance our sports cars’ driving thrills. And we will do this in our own distinctly uncompromising way.
We want to give our clients greater freedom to choose the right type of powertrain, so we welcome the commitment at European Union level to allow the adoption of e-fuels. We believe that ICE [ the internal combustion engine] still has an important role to play also in a carbon-neutral world. And together with our partners, we are studying and evaluating solution that will contribute decreasing CO2 emissions.
At Ferrari, moreover, we have a unique advantage because in 2026, our Formula 1 cars will begin to use 100pc sustainable fuel. And this means that we will continue to develop technologies on track and later move them to road.
E-fuels can already power our current internal combustion engines. While the production of e-fuels will receive a boost from the recent European Union decision, I see many questions and doubts about their costs and availability.
Although, I can understand this question, I’m a firm believer in the power of technology innovation. I have learned from experience, how initial difficulties in a new technology can be overcome as you learn how to optimize the process. This will be true for both electrification and e-fuels. We will, therefore, continue to execute our product strategy detailed during the Capital Market Day with the highest determination.Benedetto Vigna, CEO, Ferrari, Q1 2023, 4 May 2023
Benedetto Vigna became CEO of Ferrari in June 2021 and he is a major ‘something new’ and a class act. Since he arrived the shares are up 66pc.
Ferrari CEO Bendetto Vigna confirmed that the automaker intends to complete construction on an additional plant at Maranello specifically targeting electric vehicles by next June, according to a report out of an investor conference hosted by Bloomberg.
Vigna previously announced Ferrari’s intentions to become a carbon neutral company by 2030, with the new facility at Maranello playing a role in that lofty goal. Known internally as the “e-building”, Ferrari intends to use the new facility to build components for hybridized internal-combustion and fully-electric vehicles, including motors, battery packs and inverters. Ferrari will continue to develop its own powertrain components in the EV era, with specific goals surrounding industry-leading capacity and mass ratings. Vigna also confirmed that the site will serve as the production base for the brand’s first fully-electric vehicle, with the plant aiming to be online by next summer. The Ferrari EV won’t make its actual debut until the fourth quarter of 2025 however, with Vigna pointing towards volume production beginning in earnest in 2026. It is thought that the upcoming EV model could be an SUV, following the Purosangue in expanding Ferrari’s segment reach.
Of course Ferrari will have plenty of need for EV components before that model arrives, as its lineup already contains the 296 GTB and SF90 Stradale hybrid lineups.That mix is slated to increase over time as well, with Ferrari targeting a 60 percent EV and hybrid sales split by 2026. The automaker intends to see that jump to 80 percent by 2030, with EVs and hybrids making up an equal share of that market. That means we can all expect a number of new Ferrari models to arrive carrying some form of battery pack over the next few years. The company was clear that it intends to retain some form of internal combustion vehicle on offer into the future however, but we’ll have to wait and see what that looks like.Lucas Bell, RoadTrack, 6 June 2023
More Share Recommendations
Ferrari. RACE Buy @ $328.5