Markets welcomed news on Thursday that Samsung Electronics estimated a second quarter revenue increase of 21% from a year ago, while operating profit would likely be up by 11%.
Strong sales of memory chips to server customers helped, leading to the best April-June profit since 2018. Still, smartphone shipments were at least 5% below a previous forecast.
That positive Samsung news came shortly after Micron Technology on June 30 said its upcoming quarter would see weakness in all its businesses except for DRAM memory. As a result, some analysts have commented that the up cycle in the industry is turning downward. AMD has signaled a slowdown in PC sales in the remainder of the year, while EV carmaker Tesla has shuttered a California office and laid off 200 workers.
Ultimately, Thursday brought investment optimism on Samsung’s news. Stocks of AMD and Taiwan Semiconductor rose, among others. AMD climbed nearly 5%, while Micron was up by 2%. Qualcomm also rose by nearly 5%. Nvidia rose by 3% to $156 after hitting a 52-week low on Tuesday. Intel and Broadcom shares were also up by 3%, while Marvell Technology was up by more than 6%.
Of all the chipmakers, AMD offers a good insight into how recent months have unfolded amid inflationary worries and what the long term future may reveal. Over the past year, AMD shares reached a high of $161.91 on Nov. 29, but had fallen to $73.67 on July 1, then bumped up to $79.10 on Thursday. Those numbers represent about a 55% drop over the last eight months, even though AMD is widely considered a technology innovator and a top competitor to Intel and Nvidia, among others.
AMD’s share decline is considered good for investors seeking a low entry point, but AMD’s promising future is why investors and customers (and even employees) will likely favor the company.
“It is fair to say that AMD’s business is firing on all cylinders, particularly in the data center,” wrote Ashan Vashi in a note on Seeking Alpha. Vashi believes AMD is undervalued by 44%. While AMD has had a reputation for chips for gaming and PCs, it is also a threat to Intel in the data center. “AMD’s end markets are only going to get larger and AMD has a lot of market share to win from its rivals,” Vashi added. “Thus, I can see AMD growing at a healthy clip for many more years to come...
“Growth may dip in a recession, but it will come back for sure [with] more semiconductors in the future, not less.”
The concerns of big volume investors are clearly different from average workers who are investing in their retirement accounts. With all the tumult in markets of late, investor Warren Buffett, the Oracle of Omaha, had this advice for, mainly, average retirement fund investors: “Don’t watch the market closely…Money is made in investing by owning good companies for long periods of time.”
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