Our New Top Pick (AMD) is forecast to grow at a rate of 34.8% this year.
Advanced Micro Devices, Inc. (AMD)
From The Inger Letter
The New Year will redefine technology a bit; and won’t emulate the 2018 behavior. First of all, as investors know, a year ago in January 2018, we reversed our ‘to the Moon if Trump won’
stance to ‘sell into rallies’, as we viewed that thrust as an internal market blow-off. It mattered
for the future, since we envisioned a ‘Rinse & Repeat’ series of waves throughout months that
followed, during which a narrow universe of mostly technology (or FANG) stocks held up the
Indexes, while many other stocks engaged in internal corrections (stealth bear markets).
In our view, nuances of stagnant, if not recessionary conditions, were evident last Spring. My view was that about the time it’s officially recognized, it will be nearly time to get back in. In fact, we suggested initial scaling-in during the anticipated plunge just before Christmas 2018, with a degree of varying unfinished business on the downside likely in 2019.
Among the stocks we warned about last summer is Advanced Micro Devices, Inc. (AMD). In Berlin this past September, I met with the company’s Product Manager for Germany at IFA (the world’s largest electronics show; with hints about CES months earlier). I remarked to readers I was impressed by ‘relative performance’ of the company’s new 7 nm ‘Rizen’ processor, effectively competing with Intel and Nvidia. In fact, its more mainstream Navi GPU may ‘crush’ competition; as it has faster performance at a lower price-point, unless Nvidia wants to take millions in losses.
One reason we warned about semiconductor stocks last summer (at nearly double current
prices) was our forecast bubble-burst in cryptocurrencies (Bitcoin was 20,000 when I called for
the bubble burst and less than half-that when calling for semi’s to be clipped). These graphics
chipmakers were selling a lot into the ‘crypto mining’ frenzy; and are still working-through
stuffed-channel inventory. That’s why strength is generally unlikely until late 2019 or 2020.
I suggest, given the discounting nature of stocks; scaling-into periods of weakness during
2019’s first half before the crowd late in the year and in 2020, when AI, AR, and 5G devices,
become more ubiquitous. Since urging building liquidity on rallies all-through 2018, gradually
scaling-in makes sense and is why I said from Berlin: ‘I’ll like this stock, but at half price’. The
market was kind enough to await my return to Florida before cracking wide open.
With respect to AMD: it is the only ‘semi’ that develops both high-performance CPU and GPU
products, a competitive advantage as the company introduces multiple products outperforming
competitors. What it is introducing now (I saw at IFA and now CES) is part of next generation computing to help define AI, AR, and even run algorithms for autonomous vehicles down the road (pun intended).
In sum: 2017 was the last Bull market year. 2018 was huge distribution as projected. 2019 will
be a transition year, with alternating swings that, regardless of ‘trade deals’ or lower Index
prices, will launch new computing, graphics and even infrared defense, medical and vehicular
products.
So, we see AMD as a scale-in buy around 15-17; although remember 32 was on a ‘sugar crypto high’ so lower first is not out-of-the-question.
Gene Inger, The Inger Letter, www.ingerletter.com, December 31, 2018