Everyone loves a bargain.
We love the feeling of discovering a hidden pearl that everyone has come to ignore. Unvalued Grape Corvette, you can easily curtain with a small scratch on the quarter panel. HD big screen TV in the open box of your local electronics store.
You take a picture.
But even the smartest market hunters have nothing to do with investors looking for the “next big thing.” In fact, this speculative speed to “get in early” often seriously misleads investors.
Emotions are improving as key parts turn short-term market trends into a major stock trading driver.
This leads to unfounded expectations and equally unreasonable stock prices.
Leads to irrational trading.
This year is one of the best examples of irrational expectations Advanced Micro Devices Inc. (Nasdaq: AMD).
Evidence of cryptocurrency
In July, stocks were at a high level due to revenue streams from the growing cryptocurrency mining market. Ethereum was the “next big thing” and investors were speculating a lot about AMD’s value, despite signs that the trend would not continue.
Even Wall Street analysts have been guilty of boosting AMD’s stock in the Ethereum fashion, with some raising their ratings and price targets to unsustainable levels. AMD’s stock was quickly thrown into a much-bought territory by the effects of a wild wave of fashion and emotional investment.
At the time, AMD had to make an adjustment because “profiteers were emerging and the brokerage community was starting to sound more rigorous with contingent valuation issues and cryptocurrency traps.”
Morgan Stanley did it this week. The brokerage said “AMD’s cryptocurrency mining-related sales for graphics chips will fall by 50% next year, or $ 250 million in revenue.” Morgan Stanley noted that video game console sales will decline by 5.5% in 2018, but that is a decline for AMD, and investors were already expecting this, given the age of the current generation of consoles.
After the report, one could almost hear the heartbreak of cryptocurrency speculators as AMD shares fell 9%.
We need to take a look at 2016 to remember the real reason you are investing in AMD. The company caught fire early last year when it previewed several new chips, including a new CPU (Ryzen) and new chipsets. graphics processing unit (GPU), Vega. Both products were promising, and AMD was expecting strong sales after the chips were launched.
However, both Ryzen and Vega have dashed their analytical expectations. When it hit the market earlier this year, the sister chip, nicknamed Ryzen and Threadripper, not only surpassed Intel Corp.’s rival chips (Nasdaq: INTC), but also surpassed them in price. Meanwhile, Nvidia Corp. (Nasdaq: NVDA) The Titan Xp introduced the GPU as the fastest in the world, but AMD’s best Radeon Vega Frontier Edition GPU quickly stole the title.
As a result, AMD’s market share in the desktop market increased by about 45% to its highest level in 10 years – 31%, while Intel’s share fell to 69%. It is also stealing the server side and data center market share from Intel through the increasingly popular Threadripper CPU.
And these are just AMD’s core business operations. When it comes to areas such as virtual reality, driverless vehicles and artificial intelligence, AMD is already at the forefront and ready to become a market leader.
At this point, many of you may be asking, “What is AMD’s weak earnings report last week?”
And I would be faced with this: “Which weak earnings report?”
Just look at the numbers. AMD earned $ 71 million in the last quarter, earning $ 1.64 billion. Not only did Wall Street exceed those expectations, it lost 50 cents a share last year to $ 1.31 billion. In addition, AMD has raised its annual revenue growth forecast for middle-aged and older youth by more than 20%.
So why did AMD’s shares fall by about 20% after such a stellar report? Because the company said its fourth-quarter earnings would fall by 15% in a row (although that’s a 20% increase over last year). Once again, everything reaches the level of an irrational bargain hunt and a very emotional trade.
Investing in Advanced Micro Devices
But it brings you luck! This emotional storm left AMD trading at a significant discount … and a fair deal given the potential for significant growth – AMD is expected to increase sales by about 17% next year, 12.3% for Nvidia and 2.3% for Intel. %. .
The shares are up more than 30% up until next year. Alibaba Group Holding Ltd. (NYSE: BABA) How many big companies can you say outside?
So ignore the cryptocurrency warning and focus on AMD’s core products and potential with leading technologies such as AI and data centers. I won’t promise you a smooth ride, but it should be a very affordable boat.