Tag Archives: INTC

Short Sellers Grow More Selective on Semiconductor Stocks

Semiconductor trends are considered to be leading indicators of technology and broader electronics demand. In a wider sense, semiconductor and tech stocks are considered to be leading indicators for the markets in general. A strong rally in the tech sector pushed many of these companies to new highs, but with the return of volatility semiconductors will have to rally again if markets want to return to record levels.

The April 30 short interest data have been compared with the previous report. Short interest moves in these selected semiconductor stocks were mixed.

Intel Corp. (NASDAQ: INTC) saw its short interest decrease to 76.32 million shares. The previous level was 86.26 million. Note that, like AMD, Intel is one of the most shorted Nasdaq stocks. Intel shares were last seen trading at $54.25, in a 52-week range of $33.23 to $55.79.

The number of Advanced Micro Devices Inc. (NASDAQ: AMD) shares short decreased to 179.44 million from the previous level of 192.62 million. Shares recently traded at $12.05, in a 52-week range of $9.04 to $15.65.

Qualcomm Inc. (NASDAQ: QCOM) saw the number of its shares short fall to 16.89 million from the 20.03 million reported in the previous period. Shares were changing hands at $54.45, in a 52-week trading range of $48.56 to $69.28.

Short interest in Applied Materials Inc. (NASDAQ: AMAT) rose to 16.83 million shares. The previous reading was 14.46 million. Shares were trading at $54.70, in a 52-week range of $40.79 to $62.40.

Micron Technology Inc. (NASDAQ: MU) saw its short interest increase to 57.80 million shares from the previous reading of 53.50 million. Shares were trading at $51.85, in a 52-week range of $26.39 to $63.42.

And the short interest in Broadcom Ltd. (NASDAQ: AVGO) increased to 6.74million shares in the period from the previous 5.12 million. Shares were last seen at $240.25, in a 52-week range of $221.98 to $285.68.

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The 6 Most Shorted Nasdaq Stocks

Upcoming Earnings: Nvidia Reports After Thursday's Close

NVIDIA Corporation (NASDAQ: NVDA) is scheduled to report Q1 fiscal 2019 earnings after the closing bell on Thursday, May 10. Ahead of earnings, NVDA has been climbing closer to its all-time high of $254.50 it hit in mid-March. The stock closed at $250.40 yesterday and was up slightly in pre-market trading this morning. 

After better-than-expected earnings reports from competitors Intel Corporation (NASDAQ: INTC) and Advanced Micro Devices, Inc. (NASDAQ: AMD), some analysts have suggested this could indicate a strong quarter for NVDA, although expectations are high for tomorrow’s report.

For the quarter, NVDA is expected to report adjusted EPS of $1.65 on revenue of $2.91 billion, according to third-party consensus analyst estimates. NVDA’s own guidance calls for $2.90 billion in revenue, plus or minus 2 percent. In the prior-year period, the company earned $0.79 on revenue of $1.94 billion. Also, the company has beat both earnings and revenue estimates in the past eight quarters.

Gaming and Data Center

The gaming segment still makes up a majority of the company’s revenue, and it has been its second-fastest growing segment behind data center. In Q4 fiscal 2018, gaming revenue was up 29 percent year over year to $1.74 billion. For all of fiscal 2018, gaming revenue increased 36 percent year over year to $5.51 billion. When NVDA reports on Thursday, analysts are expecting gaming revenue to be around $1.6 billion, up from $1.02 billion in the prior-year period.

Management has attributed strength in the gaming segment to continual growth in games that require the higher-end of their products. Strong sales of the Nintendo Switch, which uses NVDA’s Tegra processor, was another factor management cited as a growth contributor on last quarter’s earnings call. Management also acknowledged that cryptocurrency mining has been driving demand in the gaming segment as well, but it is difficult to quantify how much of their business comes from it.

NVDA’s data center segment is its second largest by revenue and has been its fastest growing recently. Last quarter, revenue was up 105 percent year over year to $606 million. For all of fiscal 2018, revenue in the segment was up 133 percent year over year to $1.93 billion.

NVDA launched the Tesla V100 GPU in Q2 fiscal 2018 and it has been a major driver of growth in the data center segment as sales ramped up over the past two quarters, according to management. Analysts are expecting data center revenue to come in at $656 million, up from $409 million in the prior-year period.

Automotive and Professional Visualization

Both the automotive and professional visualization segments have been two of the NVDA’s smaller segments, although management has said it is optimistic about the growth prospects of the two.

At CES 2018 in January, NVDA announced the DRIVE Xavier system on a chip (SoC) would start shipping to customers in a limited amount this quarter. The company has also announced numerous partnerships with major car companies and parts manufacturers that will use its autonomous vehicle platform, DRIVE PX.

When NVDA last reported, automotive revenue was up 3 percent year over year to $132 million and professional visualization revenue was up 13 percent to $254 million. 

CLOSE TO ALL-TIME HIGH. Since the end of February, NVDA has climbed to the low-$250 range several times, but hasn’t been able to break higher than its all-time high of $254.50 hit on March 13. Over the past year, the stock is up 143.25 percent, outperforming the S&P 500 (SPX) and Nasdaq 100 (NDX) by a wide margin. Chart source: thinkorswim® by TD Ameritrade.  Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

Options Trading Activity

Around NVDA’s upcoming earnings release, options traders have priced in about a 5.7 percent stock move in either direction, according to the Market Maker Move indicator on the thinkorswim® platform. As of this morning, implied volatility was at the 44th percentile, not too high ahead of the report.

In short-term trading at the May 11 weekly expiration, calls have been active at the 250 and 260 strike prices, while puts have been active at the 240 strike. At the May 18 monthly expiration, recent trading has been a lot heavier on the call side and concentrated at the 250 strike.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.

What’s Coming Up

Next week there is a string of companies from the retail sector reporting earnings. Home Depot Inc. (NYSE: HD) is scheduled before market open Tuesday, May 15, Macy’s Inc. (NYSE: M) before market open Wednesday, May 16, and Walmart Inc. (NYSE: WMT) before market open on Thursday, May 17. Deere & Company (NYSE: DE) is also scheduled to report before the open on Friday, May 18.

Some of the next major economic reports coming up include the consumer price index (CPI),  which is released tomorrow morning. Next week, April retail sales are released the morning of Tuesday, May 15, and April housing starts are released the morning of Wednesday, May 16. If you have time, check out today’s market update for a look at what else is going on.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

Nvidia: Upcoming Earnings, Take Gains

Going into Nvidia’s (NASDAQ:NVDA) upcoming earnings on Thursday, I felt it was important to highlight to readers that while I am highly bullish the company’s long-term prospects, at its current valuation I believe Nvidia stock simply leaves no room for inevitable business mishaps.

Furthermore, at the end of the day, the stock does not know you own it, only you know you own it. If management fails to impress the Street, Nvidia’s red-hot valuation might suffer a correction which investors might not be adequately prepared for.

Medium-Term Prospects

In my previous Nvidia article (still free at the time of writing), I highlighted how not only Huang, but others from Nvidias management team, have sold its stock in the past year. I also highlighted how, excluding Huang, the reminder of management collectively sold 40% of their total ownership. I then went on to say:

I truly understand Huang wanting to diversify his [stock ownership] – it has done wonders for his wealth. But the rest of the insiders? Do all of the insiders really have better opportunities to increase wealth outside of Nvidia? Well, collectively, they certainly appear to think so. Which makes me question further why, if those who understand Nvidia best from the inside (excluding Huang) brought their undoubtedly biggest holding down by 40%, [why] wouldn’t readers of this post do the same?

Nvidia has spent a lot of time in the last several quarters explaining to investors its automotive opportunity. However, when we look for strong tangible evidence, we see that at the moment, the company’s Automotive segment, in spite of increasing by 14.6% YoY, stood at less than $570 million. Said another way, Nvidia’s Automotive revenue was roughly 5% of its consolidated revenue. Which means that even if this segment were to double or even triple over the next 3 years, it would still only be around $1.5 billion in revenue, which is not a whole lot when we look at Nvidia’s market cap of $150 billion.

Furthermore, this is its revenue and not its profit. Of course, one could argue that Nvidia’s opportunity is not solely focused on the automotive industry – which is true. However, that is one of the main reasons that investors keep highlighting about the company. In fact, during its year-end 2018 earnings call, when SunTrust’s (NYSE:STI) analyst asked for a time frame on Nvidias ramp-up of its Automotive segment, Huang answered that it would start “very strongly in 2022”. Which makes me immediately think, how many investors holding today will still, in all honesty, still be invested in NVDA in 2022?


Another problem for Nvidias current valuation is the fact that its success has attracted the competition – which is now also repositioning itself to target the same end market. For instance, Intel (NASDAQ:INTC) recently acquired Mobileye, a global leader in mapping for advanced driver assistance systems and autonomous driving. Intel has, in the past year, managed to turn around its business and after years of struggling to find meaningful growth, and to pull away from its dependence on the declining PC market is now looking for new avenues for growth. Furthermore, the company certainly has the financial resources at its disposal to make a meaningful stab into the self-driving car market.


If you have read my articles before, you will know that I focus on high free cash flow margin businesses (defined as free cash flow/revenue expressed as a percentage). I use this as a proxy for an ROE metric. I seek out businesses with free cash flow margins above 5%, which very roughly translate to an ROE above 15%. A strong free cash flow margin, such as Nvidia’s normalized 24%, describes the amount of cash that investors could conceptually take out of the business for every dollar of revenue. Having said that, in Nvidia’s case, this margin comes down ever so slightly due to management’s stock compensation. Thus, its free cash flow margin very roughly normalizes to 20%, which is still phenomenal.

(Source: Author’s calculations, Morningstar.com)

Moving on, the above table tells the whole story. No matter how bullish investors are of its long-term prospects, Nvidias Price/Sales ratio is 3 times more expensive than its 5-year average. As the company becomes bigger, Nvidia’s opportunity for outsized growth becomes smaller – because size, ultimately, is the enemy of growth. However, ironically, investors are actually willing to pay more for its stock as it grows and is more widely known by all.


Investing is never easy. However, from time to time, there are slightly easier investments to be made – and at other times, more difficult investments. Nvidia’s share price heads into its Q1 2019 full of hope and optimism. I argue that in spite of the company’s phenomenal success, its future is now more than accounted for, as its stock has had a magnificent rally over the past 12 months and by far has outpaced Nasdaq (NASDAQ:QQQ).

Disclaimer: Please do your own due diligence to reach your own conclusions.

Note: The only favor I ask is that you click the “Follow” button so I can grow my Seeking Alpha friendships and our Deep Value network. Please excuse any grammatical errors.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

AMD's Golden Run Might Be Coming to a Close

Advanced Micro Devices (NASDAQ:AMD) has been thriving by undercutting rivals Intel (NASDAQ:INTC) and NVIDIA (NASDAQ:NVDA) on pricing. The company’s strategy of offering consumers cutting-edge chips at lower prices has worked wonders, as it has managed to corner a big share of the graphics card market for itself, while cutting its teeth in the Intel-dominated central processing unit (CPU) space at the same time.

Consider this: AMD’s graphics processing unit (GPU)market share shot up to 33.7% during the final quarter of 2017 as compared to 21.1%in 2015, according to Jon Peddie Research. The company engineered this rise by first moving into the low- and mid-tier GPU marketswith its Polaris cards in2016, and then moving into the premium segment with Vega last year.

AMD followed a similar strategy in the CPU market, where Intel was holding an absolute majority. It launched chips at halfthe prices that Chipzilla was charging, and resorted to pricecuts during the recent holiday period to move more chips. Not surprisingly, CEO Lisa Su claimed that AMD’s CPU sales tripled late last year, boosting its market shareto 12% from 9.1% in the space of just over a year.

Wall Street has appreciated AMD’s efforts as the launch of its new products has coincided with a rise in its key financial metrics.

But AMD’s strategy of low-balling its opponents isn’t sustainable. The improvements in its revenue and margins have been driven by bigger factors at play, and it might not be long before its strategy stops working. Here’s why.

A bear on a line chart with a downward trend

Image source: Getty Images.

AMD’s real catalyst

The chart belowshows that AMD’s margins hit an inflection point sometime in late 2016, but the actual recovery started last year. This coincided with what’s being called the worstGPU shortage in history, as cryptocurrency mining-led demand priced gamers and PC enthusiasts out of the market. Miners were willing to pay a massive premium for GPUs to mint money from the crypto boom, so the pricesof mid- and high-end GPUs doubled.

AMD Net Income (TTM) Chart

AMD Net Income (TTM) data by YCharts.

AMD was in the right place at the right time to take advantage of this GPU shortage as it had just launched its Vega GPUs. In fact, AMD was reportedly the primebenefiter of crypto-related sales, with $776 million worth of GPU revenue last year.

A Vega RX 64 GPU that was pricedat $499 initially was going for more than$750 on the market at the end of March this year, while the RX Vega 56 was selling for almost $800 last month as compared to its launch price of $400. This spike in GPU prices positively impacted AMD’s revenue and margins.

The company gained 3 percentagepoints’ worth of gross margin last year as the revenue mix improved, allowing it to post $179 million in net income as compared to a net loss of $117 million a year ago. But the bad news for AMD is that the GPU price rise won’t last forever, and once prices hit parity, NVIDIA could get back into the game.

Normalizing prices pose a challenge

AMD’s Vega graphics cards weren’t up to the mark when they came out, delivering only marginal gains over NVIDIA’s 2-year-old offerings without much of a price difference. Moreover, the Vega GPUs have been known to be power hungry, so users running them incur additional costs in the form of electricity bills.

So, when GPU prices start normalizing, and they already have, Vega might not find many takers. For instance, the price of the RX Vega 56 has droppedfrom as much as $2,000 in January to $650 lately. By comparison, the relatively more powerfulNVIDIA GTX 1080 was at $1,200 in January and has now dropped to $700, which is very close to the price of AMD’s offering.

So, AMD will fall harder as supplies increase to bring back gamers who were earlier priced out of this market. Another factor that will hurt AMD is the launch of a specialist cryptocurrency mining chip. Chinese company Bitmain is reportedly developing a dedicated cryptocurrency mining chip that’s supposedly more efficient than GPUs in terms of power consumption and performance. Such a development has the potential to knock the wind out of AMD’s sails.

Meanwhile, AMD’s second-generation Ryzen processors have been priced way below their predecessors last year. The flagship Ryzen 2700X has been pricedat $329 this year, far less than last year’s $500 price tag for the Ryzen 1800X. What’s surprising is that this year’s chip is slightly more powerfulthan last year’s offering. This possibly means that AMD is looking to grab more market share from Intel, but its decision could backfire and weigh on its margins as the safety net of strong GPU prices slips away.

Now, we have already seen that AMD has been barely profitable over the past year, so it runs the risk of falling back into the red because of the lack of pricing power and superior products from rivals. Additionally, the likes of Intel and NVIDIA have way stronger margins than AMD, so they can easily lower the prices of their chips to protect market share.

AMD Operating Margin (TTM) Chart

AMD Operating Margin (TTM) data by YCharts.

Buying AMD doesn’t make sense

AMD is an extremely expensivestock with a price-to-earnings (P/E) ratio of almost 250. In comparison, both NVIDIA and Intel are way cheaper,with trailingP/E multiples of 48 and 26, respectively. Getting into AMD at this valuation isn’t a good idea given the potential margin challenges that it might face.

Moreover, analysts don’t expectany growth whatsoever in AMD’s earnings over the next five years. So, there’s a possibility that AMD’s golden run could be over, as the prime catalyst that has powered its growth is waning.

Why AMD Will Not Fall Below $11

As a company in a turnaround situation, Advanced Micro Devices (AMD) would traditionally get pulled lower as markets teeter with a downward bias. At the time of writing, the S&P 500 and the Dow Jones are trading lower by 0.5 1 percent daily. The volatility gives bears, who collectively raised their bearish bet against the stock, an excuse to find doubt in AMDs recovery. Unfortunately, the chip company reported too good a quarter and raised its guidance, lessening any doubt that the company will achieve higher sales and profits in 2018 and beyond.

Cryptocurrency a Non-Issue

AMD is well aware that its loyal fans of PC gamers will give Vega a chance over Nvidias (NVDA) GTX graphics cards. The cryptocurrency miners, specifically for Ethereum but tracked through the ETF (OTCQX:GBTC), are more than willing to pay twice or three times over MSRP for Vega GPUs. Since AMD does not benefit from the higher prices, and crypto miners will slow GPU purchases as mining becomes less profitable, the company looks out for its community of enthusiasts. On the conference call, AMD said:

Our first priority when we look at (the) allocation of graphics cards is to gamers. And so that’s through OEMs, that’s through system integrators, that’s also working with key e-tailers to make sure that they are prioritizing the gamers segment and we’re going to continue to do that. And so, that’s one piece that we know well. We also work directly with the commercial miners, and so, we see kind of what their forecasts are and they work with us and so that we have good visibility on.

Source: SA Transcript

AMD Vega
Crypto miners account for only 10 percent of GPU revenue. While they have disrupted pricing for GPUs, memory, and other PC parts, AMD will continue supporting their needs. Its just that it will put a higher priority to the gamer market. Last month, prices of GPUs started falling by around 25 percent. ASICs designed to mine Ethereum put a negative pressure on GPU prices. So as mining using Vega cards fall, the market could get a potential flood of AMD and Nvidia GPUs. Since the resale value of such cards is lower and the demand less desirable, it should not compete with sales of AMDs GPUs at the retail stores.

Ryzen Momentum Accelerating

ASPs for CPUs rose during the quarter and will go up again throughout the year. Ryzen accounted for 60 percent of client processor revenue, up around 20 percent sequentially. More desktop and notebooks are getting Ryzen chips, giving ASPs a lift. The launch of second-generation Ryzen desktops, based on the 12 nanometer Zen+ architecture, should not only keep ASPs from falling but may even give a boost. With more retailers like Dell and HP Inc. (HPQ) offering Ryzen-powered computers, AMD may need to raise its revenue forecast later this year.

In the current second quarter, Ryzen mobile launch will not add to results in the near term but will give profit margin a lift later this year. Already, Dell has 2-in-1 notebooks, while Acer, HP, and Lenovo all experienced strong sales last quarter. Investors may confidently forecast higher mobile revenue and profits in Q3 and Q4 this year, above managements forecast.

AMD is not stopping at Zen+. It is building on the 7 nm capability, in-line with the product roadmap for Ryzen:

I think as we look forward, and I think this is important, we believe that the 7-nanometer capability of the foundry ecosystem is very good, and that puts us in a good competitive spot from a manufacturing standpoint. And then, on the design side, obviously, we have things that we’re planning. And so, I see the competitive environment as one that is as good and we’re going to work very hard to make sure that it gets better over time. Obviously, we take the competition very seriously.

Source: SA Transcript

Conversely, Intel is delaying its 10 nm Cannon Lake because it can. To compete effectively against AMD’s Ryzen, Intel need only cut prices for its chips.

Deep-Learning Platform

Just as Nvidia (NVDA) stock trades at P/Es in the 40 50 range thanks to its deep-learning and super-computing offering, especially in the ADAS (self-driving) market, the same may happen for AMD stock. Still, investors must have patience before AMD trades at Nvidia-like multiples. Radeon Instinct 125 is getting validated and tested at this time. AMD just launched ROCm, or Radeon Open Compute ecosystem, a platform for GPU-Enabled HPC and Ultrascale Computing.

Speaking of supercomputers, AMD announced a deal with Cray (CRAY) whereby Crays supercomputers will use EPYC chips.

ROCm is in the early innings and is something that offers power-hungry users an alternative to Nvidias offerings.

Semi-Custom Sales Fall

Investors should not be surprised that revenue from the embedded and semi-custom segment dropped in the first quarter. AMD did not collect any big royalty payments in the period. The console refresh cycle has yet to restart. Until Sony (SNE) and Microsoft (MSFT) ask for more powerful APUs, the Jaguar architecture is good enough for current-generation consoles.

Valuation and Takeaway

At $11 a share, AMD may trade above its peers from an EBITDA multiples comparison. The forward growth is under-stated in light of the pace of Ryzen and Vega sales the company demonstrated in its first quarter. Sure, Micron (NASDAQ:MU) and Lam Research (NASDAQ:LRCX) are valued at lower forward P/Es, but if its growth is slowing and AMD’s is accelerating, the disparity in the valuation is justified.

Source: finbox.io

And while Wall Street has an average price target of $13.84 on AMD stock, conservative investors may choose Qualcomm (QCOM), Micron Technology, Nvidia, and Intel (NASDAQ:INTC) as better comparisons. In that scenario, AMDs relative premium is justified because of the 40 percent revenue growth in the last quarter. Even after assuming revenue growth slows to the single digits within the next 10 years, AMD stock has a fair value in the teens.

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DIYers (Do-it Yourselfers) benefited from the AMD trading strategy ahead of the earnings report. This DIY idea originates from the DIY Value Investing marketplace service.

Disclosure: I am/we are long AMD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.