Shulou(Shulou.com)05/31 Report--

Organized and released on January 10, 2022: in fiscal year 2021, AMD set records in many ways. The company achieved rapid revenue growth in its core business in fiscal 2021 and raised its revenue forecast in each of the past two quarters.

In response, Wall Street corporate financial analyst seekingalpha analyzed the overall situation of AMD over the past fiscal year. AMD's revenue grew 54% in the third quarter from a year earlier, and the company's strong execution led to a record $4.31 billion in revenue. In the computing and graphics business, Ryzen, Radeon and AMD Instinct processors for gamers generated $2.4 billion in revenue in the third quarter, up 44 per cent from a year earlier.

Due to strong demand in the end market, the average selling price / ASP of processors continued to rise in the third quarter. Of these, the fastest growing is AMD, because customers are absorbing EPYC server processors faster. In the third quarter, AMD's corporate revenue rose 69% year-on-year to $1.69 billion.

In the third quarter, AMD's corporate revenue rose 69% year-on-year to $1.69 billion. The company expects total revenue to grow 65% in fiscal 2021 compared with the same period last year.

The quarterly revenue of AMD in recent years

Both Nvidia and AMD have announced that they are under regulatory review. Nvidia hopes to buy UK-based ARM to gain access to its chip architecture and save on licensing fees. AMD wants to acquire Xilinx to strengthen its data center business and gain synergies from its business portfolio. To that end, in a proposed $35 billion deal last October, AMD offered 1.7234 AMD shares in exchange for each Cyrus stake. The deal is currently under review by China's State Administration of Market Supervision and Administration. A final decision is expected to be made soon. Because AMD has made concessions to antitrust regulators and guaranteed that the deal will not affect the Chinese market, the deal is much more likely to be approved. The report also shows that the deal will be approved. AMD's share price has recently fallen 16 per cent, in part because the market was cautious before Chinese regulators made trading decisions. If the acquisition is approved, AMD's share price could rebound.

AMD's free cash flow improved significantly in the first quarter of 2021 due to increased end-market demand for processors, higher product pricing and increased profit margins. The prospect of AMD's free cash flow is still underestimated. However, due to strong market conditions, there is still a high demand for AMD products. In the third quarter, AMD generated $764 million in free cash flow and $4.13 billion in sales. As a result, the profit margin for free cash flow is 18%. Free cash flow in the third quarter of the 21-year total increased 2.9 times year-on-year, due to AMD's massive revenue growth and improved revenue-to-cash conversion.

AMD's free cash flow margin for the first nine months of fiscal year 2021 was 21%. If the pricing of the client processor ASP remains strong in fiscal year 2022, AMD's free cash flow margin could reach 30 per cent next year.

Free Cash flow of AMD

AMD's free cash flow rate is 1.68%, much higher than Nvidia's free cash flow rate.

AMD currently has one of the strongest product lineup in recent years. Ryzen game processors are out of stock, as are AMD's Radeon graphics cards. These products are very popular with gamers. The shortage of GPU, and partly due to demand from cryptocurrency miners, has caused prices in the graphics card market to soar, driving up average sales prices. AMD has also achieved great success with its third-generation EPYC server processors, which are based on AMD's third-generation EPYC server's Zen 3 micro-architecture to provide faster application performance and improve business productivity.

AMD will launch a new processor next year, which could lead to accelerated revenue growth and an increase in free cash.

With the start of a new upgrade cycle, this could lead to accelerated income growth and higher free cash flow margins.

A new upgrade cycle begins. In the first quarter of 22, AMD will launch a new server chip, Milan-X CPU, for the first time.

Milan-X CPU, which builds on AMD's new 3D-Cache technology and promises to improve performance by 50%. The release of a new Milan-X processor may lead to an acceleration of server CPU sales. Server CPU sales in AMD's already booming enterprise division will accelerate in fiscal year 2022.

AMD and Nvidia are both great companies with great products, but I think AMD is better because there is a discount on its growth compared to Nvidia. AMD is expected to generate $19.1 billion in revenue in fiscal year 2022, an estimate that highly underestimates the value of AMD. I believe AMD will generate revenue of $21.7 billion + /-$800 million in fiscal year 2022, and the company will continue to grow much faster than the market forecast, as product pricing and demand for processors remain strong into fiscal year 2022.

But if we only forecast revenue of $19.1 billion next year, AMD's market capitalization is 8.7 times sales, while Nvidia-- is estimated to be $31.5 billion based on fiscal 2022 revenue, and its market capitalization-to-sales ratio is 22.1.

Sales of Nvidia are expected to grow faster than AMD during the fiscal year 2021-2025. Wall Street expects AMD's revenue for fiscal 2022 to be $21.7 billion (up and down $800m).

Comparison of AMD and Nvidia, market capitalization / sales

AMD's gross profit margin rose 4 percentage points in the third quarter from a year earlier, and it is estimated that AMD will be able to expand its recent profit margin growth in fiscal year 2022. Due to the advantages of GPU pricing and the growing demand for high-performance processors in the server market, lower gross margins and lower average selling prices for CPU and GPU may be warning signs of a slowdown in revenue.

Gross profit margin of AMD in each quarter in recent years

AMD will continue to grow its core business rapidly in fiscal year 2022, especially in the server business. Even compared with fiscal year 2021, revenue acceleration is not impossible. Considering that AMD will launch new high-performance server chips next year, this will launch a whole new upgrade cycle.

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