 Hey everyone! This is Dan with another episode of my AMD and NVIDIA videos. AMD and NVIDIA have been going through explosive growth with sales and EPS in the last few years. Their stock prices shot up even more recently. If you have bought their stocks at least a few months ago, you have already made a lot of profit. However, if you have not bought their stocks, is it the right time to buy now? In this video, I will talk about what makes AMD and NVIDIA so great. I will also talk about some recent events related to the two companies. I will talk about the right time to buy or sell their stocks. Let's get into the details. This is a table of contents of this video. I'm not going to read through every single bullet point. You can freeze frame to look at it in case you're interested. Let's move on to the price chart. Here I'm showing the price movement for the last year for AMD and NVIDIA. The broad market is represented by SPY and QQQ. Also the semiconductor ETF SMH as well as Intel. The candlestick chart here is AMD. As you can see in the last year went up by 59%. Then the yellow line here is NVIDIA. It went up an impressive 103%. Whereas SMH went up about 58%. A little bit less than AMD. QQQ and SPY. The broad market went up by about 43%. Intel went up by only 10.6%. This is the chart for the last 20 days. NVIDIA went up by 24.9%. AMD by 18%. Both of them pretty impressive. SMH and QQQ went up by about 8%. SPY went up a little bit less. About 5%. Intel actually went down by more than 8%. Clearly NVIDIA and AMD are the superstar in the market in the last 20 days and also in the last year. This is a quick review of my price forecast in my last NVIDIA and AMD video that was published on August 7th, 2021. In that video I predicted that AMD would be at $150 a share and NVIDIA at $240 a share by the end of November 2021. And when I made a prediction AMD was at 110. NVIDIA at 203. As of today, October 30th AMD is at 120 and NVIDIA at 255. Certainly both of them went up and actually NVIDIA exceeded my price target already. Will I be posting new price targets? I will talk about that in the next few minutes. Stay tuned. We have a lot to cover. Let's talk about Moore's law. There was this person by the name of Gordon Moore who was the co-founder and former chairman of Intel. Back in 1965, he predicted that the number of transistors in a dense integrated circuit, in other words IC, doubles about every two years. This is a logarithmic chart and these are real data for the density of integrated circuit. As you can see it followed a straight line here that means indeed the number of transistors in an IC has been doubling approximately every two years ever since the 1970s and that law has been the golden rule of the semiconductor industry. There's really no other industry that has been growing as fast in the last 50 years and that's why investing in semiconductor companies has been really a very profitable venture. If you look at the price for SMH, the semiconductor ETF compared to QQQ and SPY, in the last 10 years SMH, the semiconductor ETF went up by 757% whereas SMP 500 as represented by SPY went up by 265%, only about a third of the performance of SMH. QQQ is heavily represented by the semiconductor industry for somewhere in between went up by 568%, that shows us that the semiconductor industry is a very good investment choice. If you compare NVIDIA and AMD, they even performed better than SMH in the last few years and that's why I'm so interested in the two stocks. Let's continue. Let's talk about AMD. They're in the business of providing computer and graphics processors as well as enterprise embedded and semi-custom processors. They're headquartered in Santa Clara, California. It's a US company. Most recently, as of October 25th, they came out with their quarterly earnings report. They did very well. The sales rose 54% and EPS came in at 0.73, meeting the analyst expectation of 0.67, which was a very bullish sign and the EPS was up 16% year-over-year. The revenue went up by an impressive 54% year-over-year. That's phenomenal growth. That's why in the title, I mentioned the words explosive growth and the management said they expected $4.5 billion in sales in the fourth quarter, which is 39% annual growth for the fourth quarter. These are all phenomenal numbers and also they repurchased more than 7 million shares for $750 million. These are all the reasons why the AMD stock price has been going up and up recently. Let's quickly look at the investor's presentation made by the management when they published the most recent quarterly report. As you can see, their revenue trend has been very impressive, going up and up in the last few quarters. Rows margin has gone up in the last few quarters and currently is holding at a very high 48% level. EPS has been trending up very nicely also. If you look at what they've been making their revenues and profits, most of the revenues are made in the computing and graphics segment. Then the enterprise embedded as semi-custom segment also made impressive amount of profit, about 80% of the computing and graphics revenue. But if you look at growth, year to year growth, the enterprise embedded and semi-custom segment has been growing at 69% in terms of revenues, but operating income has been growing at 284% versus the computing and graphic market, which is the older market. Net revenue grew at 44% impressive, but not as good as the other segment, which is at 69% growth and operating income. It's up 34%, also very impressive, but certainly not as impressive 284%. So this is a good sign to me because that means they are growing a new market segment that's been coming up rapidly. This is a company that knows where they're going. I see a bright future for AMD. This is the chart showing the market share between Intel and AMD in the 86th processor market in the last two years, especially since 2016. As you can see, AMD's market share has been growing at the expense of Intel, which has been dipping. In this article, it was mentioned that AMD has been growing even more impressively in the server market. Specifically, their market share has grown at 3.7% year over year to 9.5% in the second quarter, and they have this new Epic processor, which is much faster than Intel's processors. AMD's Epic processors have been gaining prominence in the world's top 500 supercomputers. As of today, AMD supplies 59% of the processing cores to new supercomputer system in the top 500 list, up from 46% as of November of last year. These are all very good signs for AMD. Performance wise, if you look at this particular benchmark listing, although there are many ways of benchmark processors, this is just one of them. If you look at this particular listing of benchmark results from time's hardware out of the top seven processors, four of them belong to AMD, whereas the other three belong to Intel. That's for the gaming CPU. And if you look at another benchmark test, you can see that red are the AMD processors and blue are the Intel processors because Intel has a larger market share. So it's not surprising that we see a lot more blue than red in this chart. But as you can see that among the top seven processors here, six of them are red. That means they belong to AMD. Definitely AMD has come up with some processors with very competitive performances. This is a price comparison between AMD and Intel processors. With the same grouping, you can see that the AMD prices are actually even a little bit higher than the Intel prices. That means AMD is able to command very good price premium over Intel. And of course, that's because of the superior performances of some of the AMD processors. That's another bullish sign for AMD. This is another article about AMD growing its market share in the server CPU market. The server CPUs are different from regular CPUs for PCs and laptops because they have many more cores for accelerated processing. This is a very special segment of the market that AMD is very competitive in. As of October 27, 2020, AMD announced that they intended to acquire the company by the name of Xlinks. It'll approximately cost $300 million dollars. And it will be a stock exchange merger. That means AMD will not have to borrow more money or come out with cash to merge with Xlinks, which is a very wise way of doing a merger. New shares of AMD common stock will be issued. Strategically, this merger will enable AMD to expand the number of chips it can offer to its customer, especially in the few programmable gate array area. And it will also help AMD build its efforts to design cutting edge semiconductors. Looks like this merger is most likely going to happen because it already cleared the hurdle with US, UK and EU. The final piece is getting the approval from the Chinese government, which is expected to be done in the next month or so. What are AMD strengths? First of all, they have been increased their CPU market share significantly in the last few years, as well as their revenues and EPS. The enterprise embedded in semi custom segment grew even much faster than the overall CPU market share. That's a new segment of the business. AMD's processors are very competitive against Intel's in price and performance. Recently, they secured a contract with the Sony PS5 and Microsoft Xbox Series X or the gaming processors. That means there will be a steady stream of revenue for AMD in the next six to seven years. The Xlinks merger will certainly help them. What are their weaknesses? They do not have their own foundry and they relied on foundries such as Taiwan Semiconductor to produce their chips. And as you know, there's been a worldwide chip shortage recently. In the GPU market, we'll talk more about GPU to graphic processors. They are trailing behind NVIDIA and actually they've been losing market share to NVIDIA in the last two years. We'll talk more about that when we get into NVIDIA in details later on. If you like what you've seen so far, I'd like to encourage you to click the like subscribe and notification button. This will enable you to receive notification when I publish my new videos and it will encourage me to publish more videos like this in the future. Thank you very much. Let's continue. We have a lot to cover. Overall, I am very bullish on AMD. Let's talk about NVIDIA. NVIDIA is another semiconductor company. They focus on graphic and computing and networking processors. Their processors are used in gaming, professional visualization, data center, artificial intelligence and automotive markets. They are also headquartered in Santa Clara, California, another US company. Last time NVIDIA announced their quarterly earnings was on August 18, 2021. The next earning days will be November. Their last quarterly earnings was $1.04 per share EPS and beat the expectation of 1.01. That's definitely a very bullish sign. Their revenues was $6.51 billion. Also beat the expectation. Another bullish sign. And they forecast $6.8 billion in revenue in the third quarter. Again, beating the expectation. Their revenue rose 68% annually during the quarter. Very impressive performance. And the graphic segment, which is their strongest segment grew and even better, 87%. The computing and network segment ruled 46%. Also very impressive. Overall, just a bunch of very impressive performance numbers. NVIDIA's next quarterly earnings date is November 17, 2021. I'll definitely be paying close attention to that. Let's talk a little bit more about GPU, the graphic processing units. GPU is known as a visual processor originally. That's what it was designed for. But recently, its applications have expanded into different areas, including artificial intelligence, deep learning, virtual reality and augmented reality system, as well as supercomputers. The GPU market size is valued at $19.75 billion a year in 2019. And of course, it has grown a lot more since then. And the rate of growth is 33.6% per year. Whereas the general CPU processor market has been growing at only about 4.1% per year. And definitely this is a much faster growing segment of the processor market. One of the terms mentioned here is deep learning. Let's touch on that quickly. Deep learning, sometimes referred to as neural network, is used for facial recognition, autopilot, credit and loan application evaluation, Sona radar and image signal processing, as well as looking at ECG, EEG, market analysis, stock trading advisory system, etc. Certainly this is the cutting edge of artificial intelligence applications and NVIDIA's graphic chips have been used in these areas. Under this video in my YouTube channel, I have posted these links that you can use to learn more about deep learning. Let's continue. Let's look at NVIDIA's GPU market share. There are basically two dominant players in the GPU market, NVIDIA and advanced micro devices. The gray bars are NVIDIA and the dark blue bars are AMD. As you can see, NVIDIA has been expanding its market share in the GPU market in the last two, three years. Most recently, as of the second quarter of 2021, NVIDIA has expanded its market share for GPU to 83%, whereas AMD has been losing market share to NVIDIA. Although AMD, as we discussed previously, has been gaining market share out of Intel, especially in the server processor market. This is a benchmark listing of different GPUs. This is from again comms hardware.com. Again, there are many different ways to do benchmarking. There's just one of the benchmarks from this list. NVIDIA has seven out of the top 10 GPUs. These three are AMD GPUs. And that's why NVIDIA has been the market leader in the GPU market, although AMD has been doing pretty well also, but not as well as NVIDIA. It was announced in September 2020 that NVIDIA wanted to merge with ARM, which is a British company, because ARM has this proprietary processor design patent that's been licensed to many semiconductor companies. With the merger, NVIDIA expects ARM to help them to improve their technologies in artificial intelligence and many other areas. If this merger can go through, it'll be a huge boost to NVIDIA. However, they're running into some roblox. First of all, UK is considering blocking this merger because of national security risk. And then it's about October 27, just a couple days ago, the news came out that the EU now is investigating this merger because they are worried that it might lead to higher prices, less choice and reduce innovation in the semiconductor industry. Looks like there have been more and more roblox in front of NVIDIA with regard to the ARM merger. Although even without this merger, I believe NVIDIA will do well on its own based on their current trajectory. I look into NVIDIA's quarterly report and look at their various product segments. Their most prominent product is in the gaming segment. And then next to that, the data center. If you plot these numbers into a chart, the black dotted line here is a total revenue using the right vertical axis. The other lines use the left vertical axis. The dark blue line here is a gaming segment, which is the biggest segment in terms of revenue. Right next to that is a data center segment. Looks like the gaming segment is growing pretty fast. Data center is pretty much growing the same rate as this gaming segment. That's why gaming and data center are the two main sources of revenues for NVIDIA. NVIDIA started out as a company that designed graphic processors, the GPUs. And now they have more than 80% of the market share, as we have seen already. In the meanwhile, they recently came up with the DPU, the data processing unit, which is a new type of processors. And in 2023, they will be introducing a CPU. And that'll allow NVIDIA to compete head on with Intel and AMD in the CPU market. Eventually, NVIDIA will be a three chip company, what they call. Definitely, they have some pretty competitive strategic plans lined up already. What are NVIDIA's strengths? First of all, we've seen their steady increases in revenues and EPS since 2013, at least since 2013. And they are definitely the industry leader in the GPU market. Also, the GPU market is growing very quickly, more than 30% a year, as opposed to the traditional CPU market, which has been growing at only about 4% a year. And they have experienced very fast growth in the gaming business. Just already mentioned, the GPU market is growing a lot faster than traditional CPU market. They are more and more involved in deep learning and AI. What are their weaknesses? Like AMD, they do not have their own foundry and they're relying upon foundries such as power semiconductor to produce the chips. And as we know, there's been a worldwide chip shortage. And they are in competition with AMD in the GPU market, although they've been winning in the last few quarters. And the ARM merger might be blocked by the UK government and by the European Union. But overall, I'm still very bullish on NVIDIA. Let's look at the valuation of the two companies. First of all, let's look at the sales. These charts are from the Better Investing.org website, the stock selection guide database. The black line here represents AMD and the orange line represents NVIDIA. The green line here represents Intel. As we can see, Intel has a lot more revenues than AMD and NVIDIA. But NVIDIA and AMD's revenues have been growing much, much faster than Intel. As far as EPS, definitely impressive EPS growth for NVIDIA, much slower for Intel, almost flat in the last two, three years. AMD since 2016 has been growing very fast. This is the chart for return on equity for AMD, NVIDIA, Intel. And this is the chart showing the debt to capital ratio. Intel and NVIDIA, the debt to capital ratio has been pretty flat with NVIDIA taking up a little bit in the last few quarters. But the AMD line is very impressive. The debt to equity ratio has been dropping very quickly. That means they've been paying off a lot of their debts, which is a good sign for AMD. This is my calculation to estimate the stock price for AMD. First, I look at the other similar semiconductor companies, including NVIDIA and AMD. They're here, AMD and NVIDIA. Look at their trailing P ratios and forward P ratios and PEC ratio. As you can see, as of today, AMD, the forward PEC ratio is just 1.41, which is pretty good. NVIDIA has got a higher PEC ratio of 1.85, looking forward for five years. These numbers are from Yahoo Finance. The average trailing P ratios are 32 and forward P ratio, Yahoo gives them a 21 for this group of semiconductor companies. Then I use the assumption of 37 P ratio going forward for AMD, which is just about the forward P ratio now, and it's about the same as a trailing P ratio now. And their EPS growth is 33%. That's my assumption going forward for the next few years. The last five years, EPS growth was actually 39.81%. Therefore, 33 is a fairly conservative assumption. And then using these assumptions and their current performance for the trailing 12 months up until the third quarter of 2021, I calculated their stock price of 131 for 2021, 175 for 2022 and 232 for 2023. And from this range, I decide on a price target of $160 to be reached by the end of January 2022. And this is a fairly conservative number picked from this range. As the price goes up in the next few weeks, I will most likely revise this target upwards. For NVIDIA, again, I use the same overview for the semiconductor company, same table from the last page. For P ratio, it's higher. My assumption, I use a 70 P ratio, which is lower than the current trailing P ratio of 91 for NVIDIA, but a little bit higher than the forward P ratio set by Yahoo Finance. And EPS growth, I use the assumption of 32.6% for the next few years, whereas their average P growth for the last five years is a very impressive 52.83%. That therefore 32.6% is a conservative number. And using these assumptions and the latest financial performance for trailing 12 months, I arrive at the stock prices for 215 to 85 and 378 for 2021, 22 and 23. And from this range, I decided to pick a target of $280 to share to be reached by the end of January 2022. Let's look at what the professional analysts have been saying about AMD. I'm comparing the analyst ratings from August 6th, 2021. That's when I published my last video to the ratings today, October 30th. The price of course went up from 112 to 120. My target went up a little bit from 150 to 160. I share Yahoo Business, maintain their buy rating at 2.3 out of five. And the high target went up from 169 to 180. Average target went up from 104 to 133 and low target went up from 17 to 100. Now that's not typo. I did verify that. Maybe that was typo on Yahoo's part. But now they've corrected it to a more reasonable number of $100 a share for their low target. Who is Nevillea? Overall only a C rating. Nevillea is not too bullish on this company. The quant rating actually got upgraded from a D to a C on account of the increase in stock price for AMD in the last two, three months. And fundamental rating is very strong at B. TipRanks.com maintains a moderate buy rating. The high target went from 150 up to 180. Average target went 07 to 137 also went up. Low target also went up from 71 to 13. CN Money maintains the buy rating. High target went up from 169 to 180. Medium target went up from 110 to 138. Low target went up from 60 to 77. We can see the pattern here. Pretty much the professional analysts have been upgrading the price targets. That's a very bullish sign for AMD. When Nevillea, of course, the price went up from 206 to 255. My target also got revised up from 240 to 280 to be achieved by the end of January, 2022. Yahoo Business maintains a buy rating at 1.9 out of 5. High rating also went up. Average rating went up 189 to 233. Low rating remains the same. Luz Nevillea downgraded NVIDIA from B to C. And the quantitative rating went from B to C. Fundamental rating remains at B. TipRanks.com maintains its strong buy rating. High target went up from 250 to 300. Average target went up from 204 to 241. Low target went up from 150 to 185. CAM Money maintains a buy rating. Upgraded the high target from 250 to 328. Medium target went up from 193 to 235. And the low target remains at 110. Overall, we see a lot of upgrades on price targets, with the exception of Luz Nevillea. I believe that's still a pretty bullish sign for NVIDIA. What are my strategies? First of all, I should mention that I bought AMD shares on August 11th, and I bought NVIDIA shares on August 12th. I tweeted by subscribers about these trades, and I still hold some of these shares. I will hold the shares for the long term because I'm bullish about these two companies for the long term, as I mentioned, and I'll swing trade at rest to optimize my profits. In general, I will sell when the price pulls back at a major resistance point, or when adverse news develops, or I will buy when the price bounces back from a low RSI value, or from a major support point, or when positive news develops. So today, because AMD and NVIDIA have been doing up for a while, both of them are at pretty high RSI levels. RSI stands for Relative Strength Indicator. Later on, I will publish a technical analysis for the two stocks, hopefully in the next couple of days, and I will talk a little bit more about that. These two stocks are overboard on the short term. Therefore, they might go sideways or even go down a little bit in the next few days. So I will wait before buying more. This is not a good time to buy. And then I might even sell some shares during short term pullback. The long term, I do believe the prices of both companies will continue to march up, as I indicated in my evaluation of the two companies. And I will update my subscribers by way of Twitter messages when I buy or sell shares. And I'll post my technical analysis of the two companies in the next few days. That'll explain my strategies for short term trades. At this point, I'd like to remind you to also subscribe to my Twitter account, which is Dan Marketel, in addition to subscribing to my YouTube channel. For example, on August 11th, I said I follow my strategy based on the video that I posted a few days prior and I bought AMD shares and I'm still keeping those shares and the shares are up already by 11%. Then the following day, I bought NVIDIA shares. Some of those shares I still keep as of today, which are up already by 17%. That's definitely very impressive. And then on September 20th, because there was a short term pullback of NVIDIA shares, actually the broad market also dropped a little bit. That's why on September 20th, I sold some of my NVIDIA shares at 4.6% gain. Since then, the NVIDIA price will cover and continue to march upwards. But by then already being concentrating on buying shares of TQQQ, Upro, as well as Netflix. And that's why I got distracted and didn't come back and buy more NVIDIA shares. But I still keep some of the shares that I bought on August 12th and definitely I still have the AMD shares that I bought on August 11th. So far, my investment in these companies have been very profitable for me. If you like what you've seen so far, I'd like to encourage you again to click the like, subscribe and the notification button. As usual, I very much welcome your comments, questions and suggestions. Let me recap my price predictions for AMD. My target is $160 a year, NVIDIA $280 a year to be reached by the end of January 2022. And as of today, AMD is at $120 and NVIDIA $255. In other words, both of them have quite a bit of space to go up from where they are now. I'd like to remind you that I'm not a financial advisor. I share my stocks trading strategies and analyses for educational purpose only. If you want to buy or sell stocks, you should make your own decisions and you should definitely consult with your financial advisors before you do so. This about wraps up my video for now. I will chat with you in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.