3. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 89
10-Year Share Price Gains as of January 18: 2,510%
Advanced Micro Devices, Inc. (NASDAQ:AMD) was incorporated in 1969 and is headquartered in Santa Clara, California. It operates as a semiconductor company worldwide. On January 15, while Wall Street was cautious about the entire semiconductor industry, Wells Fargo selected Advanced Micro Devices, Inc. (NASDAQ:AMD) as one of its top chip stocks for 2023 amid pockets of optimism in certain areas of the sector.
On January 11, KeyBanc analyst John Vinh reiterated an Overweight rating on Advanced Micro Devices, Inc. (NASDAQ:AMD) but lowered the firm’s price target on the shares to $80 from $85. His quarterly supply chain findings are mostly negative. However, he continues to see a “soft landing” scenario and believes semiconductor companies are in a much better position to navigate this downturn due to improved visibility, more secular drivers, and better pricing leverage as selective price increases continue.
According to Insider Monkey’s data, 89 hedge funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD) at the end of Q3 2022, compared to 87 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 19.4 million shares worth $1.2 billion.
L1 Capital International made the following comment about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q3 2022 investor letter:
“The share price of Advanced Micro Devices, Inc. (NASDAQ:AMD) was weak during the quarter and weakened further in early October when the pre-announced revenue was significantly below prior guidance, reflecting an acute slowdown in the PC market. Data center related revenue grew strongly, albeit below our expectations, while gaming and embedded revenue was in line with our base case.
Geopolitical risks have increased for the semiconductor sector, with the U.S. Government announcing restrictions on the sale of certain technologies to China. Despite near term headwinds, AMD is well positioned for the medium term, with a technology lead over Intel in servers for data centers and rapidly gaining share in the PC/notebook sectors. Its gaming and embedded applications continue to grow strongly. AMD is a very capital light business, with manufacturing outsourced. After expending nearly $5b on research and development, AMD generates around $5b of free cash flow. With a net cash balance sheet, we expect management will accelerate buyback activity at a share price well below fair value.
The share price of our more cyclical businesses, in particular the building products companies which have exposure to the U.S. residential, repair and renovation and infrastructure sectors, were broadly flat for the quarter. Rapidly escalating mortgage rates and rapidly reducing affordability will have a pronounced negative effect on near term new residential construction activity. We believe these cyclical pressures are well understood and are more than reflected in current share prices. Overall, we strongly believe share prices are overly reflecting near-term challenges and our portfolio of companies are now meaningfully undervalued.”
