Advanced micro-devices versus Marvell technology

The global shortage of semiconductor chips has affected several industries since the onset of COVID-19 by constraining supply chains. In addition, Russia’s invasion of Ukraine could further worsen the supply chain. It is also important to note that the shortage of chips has led to higher chip prices, leading to increased income for chipmakers.

Moreover, according to the Fortune Business Insights Report, the global semiconductor market is expected to grow at a CAGR of 9.2% from 2021 to 2029, reaching USD 893.1 billion in the last year. The industry is expected to grow in the long term thanks to the wider use of chips in artificial intelligence (AI), Internet of things (IoT), machine learning technologies and the increased consumption of large electronic devices. audience.

With that in mind, today I’m going to analyze and compare two semiconductor stocks, Advanced Micro Devices, Inc. (AMD) and Marvell Technology, Inc. (LMRV), in order to determine what is currently the best investment.

Founded in 1969, AMD is a global semiconductor company that offers a wide range of products including x86 microprocessors, chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, etc AMD operates through two key segments: Computing and Graphics and Enterprise, Embedded and Semi-Custom. Based in Wilmington, Delaware, Marvell Technology is a semiconductor company that offers a wide range of Ethernet solutions, including controllers, network adapters, physical transceivers, and more. It also offers a range of storage products.

Year-to-date (YTD), AMD shares are down 31.8%, while MRVL shares are down around 31.9% over the same period.

Click here to view our Semiconductor Industry Report for 2022

RECENT DEVELOPMENTS

May 17, Piper Sandler analyst Harsh Kumar upgraded advanced micro devices from “Overweight” to “Neutral”..” The analyst noted that the recent weakness in equities creates attractive investment opportunities, especially given the strong server trends, strong semi-custom trends and commercial PC growth offsetting consumer PC exposure. The company also raised a price target of $98 to $140 on AMD stock, implying an upside of more than 40%.

Recent quarterly performance and analyst estimates

On May 3, Advanced Micro Devices said an earnings report for the first fiscal quarter of 2022. The company’s revenue increased 71.2% year-over-year to $5.9 billion, driven by record revenues in Computing & Graphics and Enterprise, Embedded and Semi- personalized; and the inclusion of Xilinx revenue. Notably, Computing and Graphics segment revenue grew 33% YoY to $2.8 billion, while Enterprise, Embedded, and Semi-Custom segment revenue grew 88% YoY to $2.8 billion. .5 billion dollars. Unsurprisingly, AMD topped the Wall Street revenue consensus by $330 million.

It’s also worth mentioning that AMD’s non-GAAP gross margin improved by 660 percentage points year-over-year to 53% amid higher server processor revenue and high-margin Xilinx revenue. Its non-GAAP net income rose 148% year-on-year to $1.6 billion. As a result, AMD’s non-GAAP EPS was reported at $1.13, beating estimates by $0.20.

For the second trimester, analysts expect AMD EPS to be $1.03, representing 63.72% year-over-year growth. Additionally, the company’s revenue is expected to grow 69.44% year-on-year to $6.52 billion in the second quarter.

Marvell Technology revenue for its first fiscal quarter 2023 increased 74.2% year-over-year to $1.45 billion, beating Wall Street earnings estimates by $20 million. The revenue increase was primarily due to a 131% year-on-year increase in Data Center revenue to $640.5 million and a 64% year-on-year growth in the Enterprise Networks segment to 286 .6 million. Additionally, the company disclosed non-GAAP EPS of $0.52, beating analyst consensus of $0.01.

Importantly, MRVL’s GAAP gross margin reached 51.9% in the first quarter, compared to 50.2% in the prior year quarter. Additionally, its non-GAAP gross margin was 65.5%, compared to 64.3% a year ago.

Currently, Wall Street expects MRVL earnings to rise 62.57% YoY to $0.55 per share in the second fiscal quarter of 2023. Additionally, analysts expect its FQ2 revenue to grow 38.47% year-on-year to $1.49 billion.

‌ ‌ Options ‌ ‌ Bets ‌ ‌ Bulls placed on AMD stocks

The options, which expire June 17, 2021, saw a surge in call buying on Thursday. Open interest for calls at $92.00 increased by 5,568 contracts to a total of 5,848 open contracts (source: barchart.com). A buyer of these calls would need the stock to reach $102.1 on the expiration date, a gain of about 3.3% from AMD’s current stock price.

The essential

In my opinion, AMD is a better investment than MRVL at these levels. I think AMD is poised to better capitalize on industry growth, given its relatively better financials and higher future growth rates. Finally, recent options trades suggest positive market sentiment for AMD stocks.


AMD shares were trading at $100.51 per share Friday morning, up $1.76 (+1.78%). Year-to-date, AMD is down -30.15%, compared to a -13.13% rise in the benchmark S&P 500 over the same period.

About the Author: Oleksandr Pylypenko

Oleksandr Pylypenko has more than 5 years of experience as a financial analyst and financial journalist. Previously, he was a contributing editor to Seeking Alpha, Talks Market and Market Realist. After…

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