AMD: the second-source trade
Every large buyer of accelerators wants a second supplier, and AMD is the only one with a product shipping at scale. It does not need to win; it needs to keep a seat at the table. At this price I think that is mostly, but not fully, priced.
Sample research report used to test the layout. Delete before launch.
Thesis
The customers set the strategy here: nobody wants a single supplier for the most expensive line item in their budget. That guarantees AMD a share of the market as long as its products are close enough. The stock trades as if that share is small and shrinking; I think it is small and stable, which is worth more.
Catalysts
- Named customer wins for the next product generation.
- Data-center revenue guidance above the current run rate.
Risks
- The product gap widening instead of closing.
- Customers designing their own chips, which shrinks the pie for both suppliers.
What would prove me wrong
Data-center revenue flat for two quarters while the market leader grows. That would mean the second source is not being used.
Position
Half position. Adding on a breakout above the spring high.