AMD Is Drinking Milkshakes
Great Ones, one of these nights. One of these crazy old nights. We’re gonna find out what turns on Wall Street’s lights.
Advanced Micro Devices (Nasdaq: AMD) is calling. The fever is high, and yet Wall street whispers and moans.
Dude, didn’t you know? Nobody likes The Eagles!
I’ve always said that I can’t control the jukebox in my head. You get what you get. Or as Hedley Lamarr once said: “My mind is a raging torrent, flooded with rivulets of thought cascading into a waterfall of creative alternatives.”
Ditto!
Yeah, ditto.
Anywho, let’s talk about Great Stuff Picks holding Advanced Micro Devices!
AMD stock dropped about 4% today because investors are worried about slowing PC demand.
To be fair — ♫ to be faaaair… ♫ — AMD CEO Lisa Su issued the warning herself during the company’s Q2 conference call:
How bad of a warning was it? Well, AMD expects current-quarter revenue to come in at about $6.7 billion, while Wall Street expects $6.84 billion. So about $140 million in warnings … give or take.
To me, however, this seems more like Wall Street being out of whack than AMD. We’re coming off two years of heavy PC sales due to lockdowns and the work-from-home movement. We’re also still seeing semiconductor supply chain issues and rolling lockdowns in China.
In other words, AMD is being cautious and realistic with its guidance … while Wall Street appears to still be in denial as to just how bad the economy really is.
Furthermore, light guidance was really the only negative in AMD’s entire Q2 report. I mean, look at these numbers!
- Earnings per share: $1.05 versus $1.03 expected.
- Revenue: $6.6 billion versus $6.53 billion expected.
Breaking these down, we see that revenue soared 70% from 2021. And that’s not even the good part.
The good part is that AMD’s data center revenue surged 83% to $1.5 billion. By comparison, rival Intel (Nasdaq: INTC) said its data center revenue fell 15% during the quarter.
Can you even call Intel a rival at this point?
AMD is going full on There Will Be Blood: “I drink your milkshake! I drink it up!”
So, no, Great Ones. I am not worried about AMD’s supposedly “light” revenue guidance due to PC sales.
I am not worried because AMD is drinking Intel’s data center milkshake.
I am not worried because this slowdown in PC sales should have been expected. I expected it.
I am not worried about AMD because literally every other metric in the company’s quarterly report was impressive and growing … most notably data center sales, i.e., the real moneymaker in the semiconductor industry.
And I’m not worried because AMD backed its full-year 2022 revenue guidance.
In fact, the more AMD stock falls, the more I want to buy. One of these nights, Great Ones. One of these crazy old nights, investors are going to realize that there is so much more to semiconductor stocks than PC sales.
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The Good: Beauty & The Airbnbeast
So Wall Street’s out of touch with reality. What else is new, Great Stuff?
Just ask Airbnb (Nasdaq: ABNB). While everyone else is still trying to get their $#!& together, reminiscing about their pre-pandemic peaks, Airbnb is out here reaching all-new peaks … like, Everest-level peaks.
Airbnb just announced that its revenue was up 73% from 2019, and it just had its strongest quarter in company history. Heck, Airbnb even reported a profit of $379 million this quarter, compared to its $19 million loss last quarter.
But like a reincarnated Billy Mays: Wait, there’s still more.
Airbnb’s “nights and experiences” bookings (I hate to think what that really means) shot up 25% year over year, and this past July 4 was the company’s highest-revenue day ever. The cherry on top? $2 billion in share buybacks … because why not.
When you look at a report like that, what’s not to love?
Well, everything, according to Wall Street. Analysts wanted 27% growth in “nights and experiences” — not that puny 25% Airbnb reported. And on the revenue side, analysts wanted to see $2.11 billion … compared to Airbnb’s actual revenue of $2.10 billion.
Well, excuuUUuuse me, Wall Street. Are we not traveling enough for your tastes? In a recession, no less?
I know, right? The absolute gall. Airbnb even said that it expects “modest acceleration” for this quarter’s bookings and beyond. You’d think that would help send the stock soaring … but nope, ABNB fell 7% on the open.
Out of touch indeed.
The Bad: Leaky TAP
Behold, Great Ones: A deep, deep divide has emerged in this great nation…
Dun dun dun!
Don’t get too dramatic — it’s only beer we’re talking here. If you could even call anything that Molson Coors (NYSE: TAP) makes “beer.”
Anyway, personal tastes aside, Molson Coors just announced that it senses a great disturbance in the force — a splintering among beer-drinking consumers between those opting for cheaper beer and those paying inflated prices for the better stuff, like Blue Moon.
Yeah, I know. Blue Moon is a “premium” beer for Molson Coors … we’ll roll with it and play its silly game. So what is Wall Street so worried about? Molson is still selling beer either way, right?
That’s the thing: Back in the distant past of last year, Wall Street wanted Molson Coors to sell off or disband its lower-priced brands, instead focusing on this elusive higher-end market. But Molson Coors didn’t — and for one simple reason.
Your casual drinkers just want cheap, somewhat palatable alcohol. That’s it. The drinkers with money are gonna be fickle as can be, so you can’t count on them staying loyal to any Molson Coors brand.
I’ll spell it out for all y’all teetotalers in the back (no judgment, by the way). Amid the pandemic, when your daily zest was deciding which wall to stare at for the night, drinkers found themselves whirling through a revolving door of boozy crazes.
That craft beer phase? Yeah … it’s gone-zo. Local breweries around here are dying left and right … especially the ones that tried to push into distribution but didn’t get a big enough following before the pandemic.
Then everyone moved on to seltzers, or making fun of those who moved on to seltzers. Then everyone decided to get on the bourbon bandwagon, much to the bittersweet chagrin of yours truly. But even growth there is starting to peter out: People are trying to class up the joint with some scotch and gin now.
Silly Great Stuff. Scotch and gin never went out of style.
Sure, but meanwhile, Molson Coors is over here sitting on crates of disgusting seltzer that’ll never be sold…
Did the booze revolving door spin too quickly for Molson Coors to keep up? Did people stop liking Molson Coors’ drinks? Maybe a little of both. And now that more consumers are becoming budget-conscious, Molson’s glad it at least held on to the cheapo beer brands.
Mind you, we’re talking about the casual drinking market and their taste vs. cost preferences. Besides, the “waiting outside for the liquor store to open in the morning” market? They literally just want bang for their buck.
For the beer drinkers out there, that’ll probably be a Molson Coors brand. It could be worse, right? It could be Boone’s Farm … uuugh.
The Ugly: Exit MicroStrategy
Well, well, well. Look how the turntables.
Remember way back when, when software company MicroStrategy (Nasdaq: MSTR) decided to back burner its software business and go whole-hog on hodling Bitcoin? And everybody was like: “Dang, look at the crypto cojones on MicroStrategy! Finally, someone gets it.”
Nowadays, though … not so much. And the company might want to seriously consider getting back into the software game.
MicroStrategy basically became another play on the price of bitcoin back when it first “reinvented” itself, which was great … before the crypto crash happened. And before crypto crashed again. And again.
How bad was the damage last quarter? A charge of $917.8 million and a soon-to-be-departed CEO. No, no, MicroStrategy isn’t whacking the guy and giving him concrete boots, but CEO Michael Saylor is sailing off into calmer waters … the executive chairman seat, in other words.
Oh, yeah… Somewhere in that mess, MicroStrategy also reported earnings. It’s not like anyone actually paid attention to the non-bitcoin news, but it’s the thought that counts.
Wall Street analysts were quick with the apologetics and excuses for MicroStrategy: “It’s all accounting noise!” “The impairment charge only counts for bitcoin’s lowest price during the quarter!” “It’s all gonna come back, baby!”
Sure. Sure it will.
Now, the quiet part that MicroStrategy won’t say out loud? Buying and holding bitcoin is dead. Even MicroStrategy with its billions of dollars in bitcoin holdings hasn’t … you know … actually made money on it yet.
In other words, MicroStrategy could’ve used a Mike Carr strategy.
I never thought Mike Carr would touch crypto — let alone develop an entire options strategy around it.
But he did and he managed to beat bitcoin buy-and-holders by FIVE TIMES in a seven-year back test.
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After you’ve checked out Mike Carr’s super-secret Stuff, let me know what you think about it!
Have you been buying and hodling bitcoin? Have you, like Mike, found other ways to play the crypto market? Let me know in the inbox: GreatStuffToday@BanyanHill.com.
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Regards,
Joseph Hargett
Editor, Great Stuff
