Hey guys, it's sasha last night amd published their quarterly results and held the quarterly update, call and amd completely smashed expectations, announcing some phenomenal results in this video. I will go through those results and i'll point out some of the really important points, as i see them for investors. I'll also, then explain how these results affect my personal view on amd stock as an investor, and what my target share price for amd is on the back of this new information. Just remember that i am just a random guy on youtube.

I am not a financial advisor. I can't provide financial advice to you and if you do need financial advice, please make sure you seek the help of a suitably qualified professional, all right. Let's dive into the numbers. First, up amd made 4.3 billion dollars in revenue which absolutely smashed analyst expectations.

It was pretty close to what i was expecting slightly higher, so very, very happy with that year on year, that revenue has grown by 54 we're on track. Everything is looking really good and things are very promising, because that is 12 up quarter on quarter gross profit is up to just over 2 billion. This is phenomenal. We have had all kinds of companies do stuff in the hardware space, but these guys are operating at a 48 gross margin, which is incredible and it was the same last quarter as well.

So this is not some kind of one-off, but then further down in the key data we have the net income figure, which is 923 million dollars, that's up 30 percent from last quarter and 137 compared to last year. This is crazy. This is really really strong, and this is beginning to show how economies of scale are beginning to show. Interestingly, non-gaap numbers this quarter are actually lower.

It looks like maybe accounting standards have been on amd's site for a few months, but, as you know, these high level numbers don't really tell us the whole story. In fact, they don't tell us the most interesting bits of the story. So here are a few other interesting things that i saw in this report. First up: let's go down and look at the performance by sector, because this is key to how well amd will do over the next few quarters and years, the retail side of the business that amd calls computing and graphics.

This is the thing that produces processors, graphics cards that are soldered directly into the market. If you like that business made 2.4 billion dollars in revenue, that's up 7 from last quarter. That is a very good costly growth rate, but it's not quite as good as the other side of their business and that other side is the enterprise part. The enterprise part makes custom chips and cloud computing hardware and a bunch of other stuff like it, and that side made 1.9 billion dollars, so not quite as much as the retail arm a bit less, but that side of the business the revenue has grown by 20.

Compared to the last quarter - and this is where the magic is really happening - amd's epic processes are taking the cloud computing world by storm. They are much better value and far more capable than anything that intel or other people at the moment are offering and cloud computing providers are tripping over each other to place huge orders. They only really started at this growth during the last quarter. I talked about this in a video that i made a few months ago, so we are yet to see the full growth here materialized.

We haven't even had a few months to see that rate really go up. I personally have switched many of my online platforms and websites in the last couple weeks to using amd hardware. I have a funny feeling because of the performance of pricing, that many other people are doing the same thing and that will only force those computing providers cloud computing providers to purchase more amd hardware and look at where this enterprise segment is in terms of the bottom Line, look at how well it's doing operating income for that sector in the last quarter was 542 million dollars of 36 compared to the last quarter. This is crazy.

That is a ridiculous rate of growth in just three months, 36 percent in three months, and this is where i get really excited because think about it like this, the overall numbers look really good, but this trajectory is where you really need to be focusing your attention. At the moment that enterprise segment is still less than half of amd's total business just about less than half, but in a quarter or two all the numbers are showing that it will become the bigger part because it is growing so much faster than the other bit And that segment is the one that has that crazy growth rate. It's just that crazy growth rate is currently not showing at the moment in the overall number, and it is not showing any signs of stopping cloud computing custom systems for things like cars, for example. Tesla is a big customer of amd and everything else in that segment has absolutely years and years, if not decades, of growth ahead we're just at the beginning.

So you can see here based on these numbers, that the real rate of growth in the future is going to be higher than the 54 we're seeing. You can see the numbers already they're, just not materialized into those quarterly reports, yet the numbers are not yet showing that real future growth rate. One other really cool thing in this report. If you uh scroll a bit further down is the long term debt number, it has gone down from 313 million dollars last quarter to nothing this quarter and first, when i looked at it, i i didn't pay enough attention.

I thought that they had repaid it, which would be great, but that is not what happened here. That debt has just moved over into the short-term debt section. You can see it sitting up there - 312 million dollars that wasn't there last quarter. So that means that this debt is a long-term debt that has suddenly now become a short-term debt.

That means it will be repaid in the next 12 months, presumably because of the timing of when it switched at some point in q3 next year, because it is only just shifted over. So let's get to the valuation, the bit. That is exciting, i'll keep things as simple as possible. Here i am not going to talk about the acquisition of xilinx uh amd is in the process of purchasing this company and they will be dishing out a whole load of shares to do it.

I talked about it last time uh, but if the deal does go through my view, my opinion is that the value of the acquisition and the synergy that it gives to amd the value that will be greater than the dilution effect of the shares they are buying. Stuff that i think, is worth more than how much money they're putting up for it. So if that deal does go through and the ceo uh lisa is saying that it's going to happen by the end of this year, hopefully, if it does get through, my target, share price would increase, even though there would be more shares. Even though there's going to be dilution, but if that deal doesn't happen, then the model that i'm going to be showing you doesn't get affected at all all right.

The last quarter has really ramped up the pace even compared to my estimates, so in the last quarter, amd have 1.15 billion of ebitda for the quarter, which is very high, but q4 is normally the biggest quarter for them. So i am projecting 1.25 billion in revenue. There, i am then projecting 6.85 billion in ebitda for 2022., that's just under sixty percent, and i actually think that's probably not going to be far off. Given what i just explained about those two parts of the business that are growing.

It might even be a little bit higher remember that at the moment they are on 54 per year and that enterprise segment is growing way faster than average. So then, in 2023, in my model, the growth rate drops to 45 in my model and then i slowly reduce it to 25 all the way in 2026, and i don't know maybe they're going to continue growing at a very fast rate. I really hope so as an investor, but i'm just trying to be a bit conservative. I have very very strong data that indicates next year is going to be good and then i'm just tapering it off.

I'm not even keeping it at a high rate, because i want to be conservative here and then i have all the usual stuff below that. I have the depreciation and amortization networking capital movements and all that mumbo jumbo. By the way. Now that long-term debt has gone away for amd, i'm expecting that the networking capital will now be positive and be relatively consistent and stable as a result.

But it doesn't really affect things very much in here. Then i have all the usual stuff 10 per year. Discount rate 5, perpetual growth and 15 times multiple for the ebitda multiple for that end of 2026 calculation, i haven't extended this one. It won't make too much difference.

I probably will next time i do one of these updates and after doing the sums i get a target share price of 190 dollars using the perpetuity approach and 195 and using that ebitda method, and so on the basis of that i mean i don't have much Wiggle room i'm going to set a 196 dollars as my target share price for now, so that's a little higher than it was last time around and as the numbers continue being better than expected, i guess that's what's going to happen. Amd's share price at the moment. Is 124.60 as i'm recording this video? So that's a 57 upside that i currently see in the stock based on this model, and i expect that we will see that switch over to enterprise being the larger part of the business at some point in the last six. Maybe nine months, depending on how things go, and that will mean that the annual growth rate of the business overall will increase.

And that's when the analysts are going to begin paying real attention. And i think that when the top line number suddenly sees an increase from what is already a very high 54, this quarter, for example, annual growth rate. That could mean that the upside materializes, sooner rather than later, as in people, will recognize that perhaps this stock is undervalued and begin realizing. The potentially their target prices are set to low and increase them as well.

So i am pretty happy to continue holding my amd position and i may be investing more in the next few weeks. If you enjoyed this video, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.