Advanced micro-devices compared to Micron technology

While supply constraints have already impacted the semiconductor industry, The Russian invasion of Ukraine could lead to further chip shortages. However, strong demand from the consumer electronics and electric vehicle industries has enabled semiconductor companies to raise prices and generate substantial profits. Additionally, continued advancements in artificial intelligence (AI), Internet of Things (IoT), and 5G connectivity are expected to continue driving demand in the semiconductor industry. According to a Fortune Business Insights report, the global semiconductor market is set to grow at a pace 8.6% CAGR by 2028. Therefore, Micron Technology (MU) and advanced microdevices (AMD) should benefit.

MU designs, manufactures and sells memory and storage products worldwide. The Company operates through four segments: Compute and Networking Business Unit; mobile business unit; Storage Business Unit; and embedded business unit. AMD operates in two segments: Computing and Graphics; and enterprise, integrated and semi-custom. Its products include x86 microprocessors, chipsets, discrete and integrated graphics processing units, data centers and professional GPUs.

AMD has gained 11% over the past six months, while MU has gained 6%. Which of these two stocks is a better buy now?

Click here to view our Semiconductor Industry Report for 2022

Latest developments

On March 1, 2022, MU announced that it was sampling the world’s first vertically integrated 176-layer NAND SSD for the data center. The launch could lead to increased sales for the company.

On February 24, 2022, AMD announced that its board of directors had approved a new $8 billion share buyback program. AMD Chairman and CEO Dr. Lisa Su said, “Thanks to our strong financial performance, we are able to increase investments to drive long-term growth while delivering additional value to our shareholders.

Recent financial results

MU’s revenue increased 33.2% year-over-year to $7.69 billion for the fiscal first quarter ended Dec. 2, 2021. Non-GAAP operating profit the company grew 180% year-over-year to $2.73 billion, while its non-GAAP net income rose 175.5% year-over-year to reach $2.47 billion. Additionally, its non-GAAP EPS was $2.16, up 176.9% year-over-year.

AMD’s revenue grew 49% year-over-year to $4.82 billion for its fiscal fourth quarter, which ended December 25, 2021. Non-GAAP operating profit the company grew 100% year-over-year to $1.33 billion, while its net income was $1.12 billion, an increase of 76 % year over year. And its non-GAAP EPS was $0.92, up 77% year-over-year.

Past and expected financial performance

MU’s revenues have grown at a CAGR of 17.9% over the past five years. Analysts expect MU’s revenue to grow 17.3% in fiscal 2022 and 21.3% in fiscal 2023. The company’s EPS is expected to rise 50.7 % in fiscal 2022 and 34.7% in fiscal 2023. Additionally, its EPS is expected to grow at a rate of 25.2%. per year over the next five years.

By comparison, AMD’s revenue has grown at a CAGR of 30.6% over the past three years. The company’s revenue is expected to increase 54.3% in fiscal 2022 and 14% in fiscal 2023. Its EPS is expected to increase 43.7% in fiscal 2022 and 16% in fiscal 2023. Additionally, AMD EPS is expected to grow at a rate of 29.9%. per year over the next five years.

Profitability

MU’s revenue over the last 12 months is 1.80 times greater than that generated by AMD. MU is also more profitable, with an EBITDA margin and net income margin of 50.61% and 24.86%, compared to AMD’s 24.67% and 19.24%, respectively.

However, AMD’s ROE, ROA, and ROTC of 47.43%, 21.33%, and 31.24% are higher than MU’s of 17.16%, 9.34%, and 10.67%, respectively.

Evaluation

In terms of non-GAAP forward PER, AMD is currently trading at 29.72x, which is 247.6% higher than MU’s 8.55x. Additionally, AMD’s advanced EV/EBITDA ratio of 23.10x is 411.1% higher than MU’s 4.52x.

Thus, MU is relatively affordable here.

POWR Rankings

MU has an overall rating of A, which equates to a strong buy in our own POWR Rankings system. In comparison, AMD has an overall C rating, which translates to Neutral. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.

MU has a B rating for value, which is consistent with its forward P/B of 1.69x, 67.1% below the industry average of 5.14x. However, AMD has a C rating for Value, which is in line with its forward P/B of 17.24x, which is 235.5% above the industry average of 5.14x.

Additionally, MU has a B rating for quality. This is warranted given UM’s 35.64% 12-month CAPEX/sales, which is 1,480.8% higher than the industry average of 2.25%. On the other hand, AMD has a quality rating of C, in line with its 1.83% year-over-year CAPEX/sales, 18.8% below the industry average of 2.25%.

Of the 97 A-rated shares Semiconductor and wireless chip industry, MU is ranked #2. In contrast, AMD is ranked #66.

Beyond what I said above, we also scored stocks for Sentiment, Momentum, Growth and Stability. Click here to see all MU notes. Also get all AMD ratings here.

The winner

The semiconductor industry is expected to proliferate with increasing public and private investment. And while both MU and AMD should benefit, we believe MU is a better investment due to its lower valuation and higher profit margin.

Our research shows that the odds of success increase when investing in stocks with an overall buy or strong buy rating. See All Other Top Rated Semiconductor & Wireless Chip Industry Stocks here.


AMD shares fell $0.04 (-0.03%) in after-hours trading on Monday. Year-to-date, AMD is down -16.44%, compared to a -3.71% rise in the benchmark S&P 500 over the same period.

About the Author: Nimesh Jaiswal

At Nimesh Jaiswal a fervent interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving the price of a stock is the key approach he follows while advising investors in his articles. Continued…

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