The technology offering you’ve been waiting for

Everyone loves bargains.

We love that feeling of discovering a hidden gem that everyone else has missed. The wrongly priced vintage Corvette with the little scratch on the quarter panel that you could easily polish off. The big screen HD TV in the open box area of ​​your local electronics store.

You get the picture.

But even your smartest bargain hunters have nothing on investors looking for “the next big thing.” In fact, this speculative urge to “get in early” often leads investors astray.

Their emotions take over as they inflate what are essentially short-term market trends into the main drivers of stock trading.

This leads to unreasonable expectations and equally unreasonable stock prices.

It leads to irrational trade.

One of the best examples of irrational expectations this year is Advanced Micro Devices Inc. (Nasdaq: AMD).

Cryptocurrency madness

In July, stocks surged due to an influx of revenue from the growing cryptocurrency mining market. Ethereum was the “next big thing” and investors were speculating heavily on AMD’s value despite signs that this fad was not going to last.

Even Wall Street analysts were guilty of surging AMD shares amid the Ethereum craze, with several raising their ratings and price targets to honestly unsustainable levels. AMD shares quickly soared into overbought territory, fueled by a fad and a wild surge in emotional investment.

Back then, AMD was supposed to make a correction as “profit takers emerge, and the most bearish contingent in the broker community begins to ring out about valuation concerns and crypto pitfalls.”

This week, Morgan Stanley did just that. The brokerage firm said that “sales driven by cryptocurrency mining for AMD’s graphics chips will decline by 50% next year, or a $ 250 million decrease in revenue.” Morgan Stanley also noted that video game console sales would drop 5.5% in 2018, but that’s a drop in the bucket for AMD, and investors are likely already expecting it given the age of the current generation of consoles.

You could almost hear crypto speculators’ hearts breaking when AMD shares fell 9% after the report.

The real AMD

To remember the real reason you should invest in AMD, we have to look back to 2016. The company caught fire early last year when it previewed several new chips, including its new central processing unit chipset ( CPU), Ryzen, and its new graphics processing unit (GPU), Vega. Both products were very promising and AMD was expecting strong sales once the chips were released.

But both Ryzen and Vega blew analysts’ expectations out of the water. When they hit the market earlier this year, Ryzen and its sister chip, dubbed the Threadripper, not only outperformed competing chips from Intel Corp. (Nasdaq: INTC), they also outperformed them in price. At the same time, Nvidia Corp. (Nasdaq: NVDA) was touting its Titan Xp GPU as the world’s fastest, but AMD’s top-of-the-line Radeon Vega Frontier Edition GPU quickly stole that title.

As a result, AMD saw its market share in the desktop PC market increase by approximately 45% to its highest level in the last 10 years at 31%, while Intel fell to 69%. It’s also stealing market share from Intel’s server-side and data center through the increasingly popular Threadripper CPU.

And those are just AMD’s core business operations. When we get to areas like virtual reality, driverless vehicles, and artificial intelligence, AMD is already on the cutting edge and ready to be a market leader.

Many of you at this point may be asking, “But what about AMD’s weak earnings report last week?”

And you would respond with, “What weak earnings report?”

Just look at the numbers. AMD earned $ 71 million last quarter with revenue of $ 1.64 billion. This not only beat Wall Street expectations, but it embarrassed last year’s loss of 50 cents a share on revenue of $ 1.31 billion. Additionally, AMD increased its full-year income growth forecast from mid-to-upper teens to more than 20%.

So why did AMD’s stock tumble roughly 20% after such a stellar report? Because the company said fourth-quarter earnings would drop 15% sequentially (although that’s still a 20% year-over-year increase). Again, it all comes down to an irrational level of bargain hunting and an excess of emotional sharing.

Invest in advanced micro devices

But you’re in luck! This emotional storm has left AMD trading at a hefty discount … and a great bargain given its considerable growth potential: AMD’s sales are expected to grow around 17% next year, compared to 12.3%. from Nvidia and a paltry 2.3% from Intel. .

The stock is more than 30% higher until next year. How many other large companies, besides Alibaba Group Holding Ltd. (NYSE: BABA), can you say that?

So ignore the hype for cryptocurrencies and focus on AMD’s core products and their potential with leading technologies like artificial intelligence and data centers. I don’t promise you a smooth ride, but it should be quite profitable.