AMD should at least be meeting expectations ‘by this time in the game’: SA Election Forum

Advanced Micro Devices (NASDAQ:AMD), the world’s second-largest maker of personal computer processors, in its latest quarterly report delivered record revenue in its data center segment, as the demand for artificial intelligence (AI) chips skyrocket.

As a result, AMD (AMD) also bumped up its full-year data center graphics processing unit revenue guidance to more than $5B, versus $4.5B guided in July.

However, despite the impressive results and the increase to guidance, AMD (AMD) stock cratered to its worst day since early October 2022.

“By this time in the game, AMD should be at least meeting guidance expectations, but in reality they should be surpassing guidance,” Victor Dergunov, investing group leader of The Financial Prophet, said on Wednesday in a conversation with Rena Sherbill, Seeking Alpha’s director of content programming, and Joe Albano, investing group leader of Tech Cache, at the Election 2024 investing summit.

The summit session explored what the U.S. presidential election means for the technology sector.

Dergunov believes this is an “AMD-specific” problem, adding that the market overreacted and that it was not such a big issue.

“Basically, I believe we’re still early in the AI game. I mean, if you want a baseball analogy, I think we’re somewhere in the fourth innings, so there should be plenty of growth left in my view,” the investing group leader added.

“(AMD) bumped their AI revenue up another $500M to $5B for 2024. And I think that’s just not enough to keep the markets really rallying behind that kind of stuff. Even Nvidia (NVDA), we’re talking nearing $30B per quarter in just AI revenue,” Tech Cache’s Albano said.

“You’re getting into the law of large numbers, where it’s going to be really difficult to accelerate that unless something material or some kind of major breakthrough comes through, which I’m not seeing at least in the next year,” Albano added.

“$5B in AI revenue is not enough to move the needle, and it’s not even (AMD’s) highest operating margin segment. So, the market isn’t rewarding everybody equally, and just because you have AI revenue, and it continues to grow, doesn’t mean that there is going to be returns on the stock at the end of it,” the investing group leader said.

Additionally, Albano agreed with Dergunov on the nascent nature of the AI trade.

“I actually think we’re closer to a third innings,” Albano said. “The difference I think where I am and Victor is, is I don’t expect that the fundamentals necessarily of the AI market are going to match the stock performance,” he added.

Here are some tech-focused and AI-focused ETFs of interest: (VGT), (XLK), (IYW), (FTEC), (IXN), (RSPT), (AIQ), and (CHAT).

For investors looking to track the elections through market instruments, here are some politically driven Republican and Democratic exchange-traded funds:

• God Bless America ETF (YALL)
• American Conservative Values ETF (ACVF)
• Point Bridge America First ETF (MAGA)
• Democratic Large Cap Core ETF (DEMZ)
• Unusual Whales Subversive Democratic ETF (NANC)
• Unusual Whales Subversive Republican ETF (KRUZ)

Readers interested in investing topics tied to the upcoming election can read coverage from Seeking Alpha’s Investing Forum: Election 2024 event; please visit this page.

Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.

More on the U.S. elections

• Robinhood to let customers trade based on U.S. presidential election predictions
• SA Asks: Which tech stocks could rise or fall on a Harris win?
• Trump says he would replace income tax with tariffs on Joe Rogan podcast
• Bill Ackman says Pershing not placing bets on U.S. presidential race outcome
• Election scenarios by UBS: Blue Sweep, Red Sweep, split Congress for Harris or Trump