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Semiconductors: Beware of Fadeaway – NVIDIA Corporation (NASDAQ: NVDA)



Fadeaway Move

"Fadeaway" is a well-known, though somewhat difficult, moving into the game of basketball.

A fadeaway or basketball fall is a jump shot taken while batting back, away from the basket. The goal is to create space between the shooter and the defender, making the blocking harder. The shooter must have excellent accuracy and should use more energy for a short period of time. – Wikipedia

  Image result for fadeaway basketball

Michael Jordan is one of the most famous fadeaway shooters. Wilt Chamberlain, Patrick Ewing, LeBron James, Kobe Bryant, Hakeem Olajuwon, Dwyane Wade, Karl Malone, and Larry Bird are some of the greatest of all time ("GOAT") also known for using this move. This is not a chance that those who bring fadeaway to move to perfection are those who make the list of GOAT.

Similarly, in recent years, semiconductors have brought their fadeaway to transition to a perfection, creating more than enough space (aka profit margin) between them (suppliers ) and their "defenders" (customers), making the "price" of stock price shots harder.

Here's how "played" well within 3 years, before Q4 / 2018 (ie 9/30 / 2015-9 / 30/2018):

  Total stock semiconductor returns within of 3 years, 9/30 / 2015-9 / 30/2018

] 1. Almost all top names have outperformed the general market (S & P 500). The total return of Nvidia Corp. (NVDA), Advanced Micro Devices Inc. (AMD), Micron Technology Inc. (MU), Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Texas Instruments Inc. (TXN), Broadcom Inc. (AVGO), and Intel Corp. (INTC) is better than SPDR® S & P 500 ETF (SPY).

Qualcomm Inc. (QCOM) and NXP Semiconductors NV (NXPI) We focus on these two companies (including AVGO) in " three musketeers our latest article.

names that outperformed the SPY also outperformed the benchmark technology – Invesco QQQ Trust (QQQ).

3. Four companies – NVDA, AMD, MU, and TSM – managed to maximize the benchmark of iShares PHLX Semiconductor ETF ( However, only the first three managed to do it precisely.

The three semis with higher (during the 3-year period of time) – especially AMD, NVDA, and MU – star in some of our articles over the past 15 months. With wit:

If you have not met this yet – we love the semis. We think it's past, present and future. hard (and honestly does not have any meaning) to argue in growth and potential here.

We love all three names – AMD, NVDA and MU – and we own all three.

do better AMD, mainly because we see it as better to choose from a risk / reward perspective but also because we see a greater potential for AMD to shine in a shining kingdom. Installing it differently, it's easier for AMD to beat and execute than its core peers.

Source: Semis: It's Not What You Want to Play, But How You Want To Play The Game (Part I), March 14th, 2018

In this two-part article, semis AMD, MU and NVDA.

At this point, you probably understand why we are this trio and why AMD is our sunshine. [19659016] Like three tenor – Spanish Placido Domingo and José Carreras, and Italian Luciano Pavarotti – created an incredible singing group in the 1990s and early 2000s, we believe that the three semis create a huge growth group in 2010 and at

No tears, no fear and one O Sole Mio: AMD.

Source: Semis: Not Just You Want To Play In But How You Play The Game (Part II), March 16, 2018

As you can see, we are seeing (that in late 2017 ; more details / proofs hereafter) selecting AMD as ou r prefer semi at the end of 2017, as well as dumping NVDA.

Our long position in AMD has been resting in a short position, just before Q4 / 2018. A short position was closed at in Q4 / 2018 and we have no position in AMD. [Until quite a long time ago]

Fadeaway Mode

However, we remind you that "the shooter must have very good accuracy and should use more power in a short period of time."

Semis has precision and strength, but now it seems, for many of them, time and energy are running.

Here's how the exact same list of companies above has taken place since Q4 / 2018 and until now (closing prices A quick observation: Only four names have outperformed the general market (S & P 500), technology The total revenue of iShares PHLX Semiconductor ETF (SOXX), SPDR® S & P 500 ETF (SPY), and Invesco QQQ Trust (QQQ)) benchmark ETFs since 10/1/2018 is better than Taiwan Semiconductor Manufacturing Co. Ltd., Micron Technology Inc., Qualcomm Inc., Advanced Mic ro Devices Inc., and Nvidia Corp.

Only Intel Corp, Broadcom Inc., NXP Semiconductors NV, and Texas Instruments Inc. is better than benchmarks.

"Fadeaway Mode" is even more awesome when we focus on the trio of NVDA, MU, and AT.

Total Return – Previous Three Years (on and including 3/13/2019)

The past three years have nothing but heaven for the trio, even though we have some last few months.

AMD (TR of + 828%), NVDA (+ 431%) and MU (+ 241%) left the dust on all other benchmarks, if fresh (SPY, QQQ) (SOXX, SMH) :

  • iShares PHLX Semiconductor ETF (SOXX) + 114%
  • VanEck Vectors Semiconductor ETF (SMH) + 101%
  • Invesco QQQ Trust (QQQ) + 71%

Total Return – FY 2018

We look at 2018 on standalone basis, including d

While AMD maintains the year as best which runs the S & P 500 stock of the year, NVDA and MU will remember the 2018.

Source: FactSet

It says that, 2018 should not be viewed as a piece. Since the last quarter is different than the three quarters following it, here's a split view of 2018, to and from the decisive date (October 1, 2018):

  • Total Return from 1/1/2018 to 10/1 The "Golden Era" where AMD (+ 206%), NVDA (+ 50%) and, to a lesser extent, MU (+ 10%) outperformed the leading ETFs semiconductors (SOXX 10% SMH + 9%), as well as major indices (QQQ + 20%, SPY + 11%) by one mile.

    Total Return from 10/1/2018 to 3/13/2019

Then came 10/1/2018 and from that date, things are not the same for the semis. Since then, it's like a mirror-opposite image on what we've experienced in the first three quarters of 2018. NVDA (-42%), AMD (-26%) and MU (-14%) are way behind of semiconductors leading ETFs (SOXX flat, SMH -1%), as well as major indices (QQQ -5%, SPY -3%).

Clearly, we are witnessing a real and meaningful fadeaway. The question now is what is the future for these semis, and throughout the rest of this article, we will try to figure out.

Past Earnings and Other Financial Aspects

First of all, it is important to note that NVDA only has a market size of almost 50% larger than the market size of MU and AMD, combined.

It says, it is noted that while the current trend is down for NVDA and MU, and up for AMD. Installing it differently, the shrinkage (in size) is exhausting, and we expect it to be deeper, continue.

The fantastic semis run is remarkably stunning by the chart below, showing the growth of trio market-caps over the past decade.

Ten years ago, all three companies were small operations that virtually no one looked. At the top of their valuation (each with stand alone), the three companies are worth more than $ 300B (!), With NVDA having a 2/3 of them.

[Sufficeittobeamarketplaceforaverages40%(about60%overthelastthreemonths)inthesameperiodasaforementionedmemory(fraudulent)fraudulentlydisruptedthis"mojo"HoweverinthelasttwoyearsMUisinaleagueitsownheremorethandoubleitsquarterlyaverageearningsfrom2016to2018HoweverMUgoldentimeisnowandDRAMandNAND'smajorproductsareexpectedtoexperiencesteadydeclineinthefuture

This is exactly the reason why Wells Fargo (WFC) analysts just dropped their expectations at Micron, citing DRAM's price concerns. WFC analysts expect only $ 22.58B (down from $ 29.9B; -25%!) And EPS of $ 5.26 (down from $ 5.87; -10%) to CY19.

Risks with high volatile pricing for DRAM and NAND flash, the need for a relatively high level of capital investment, and huge swings in Micron's profitability that took place in the past and we think it is likely to continue in the future. However, the WFC still costs MU as an "Outperform" a $ 50 PT, while bank analysts still believe that the "long-term positive secular demand driver will remain intact."

The big shocker here is Nvidia, a company that has seen tremendous growth over the past five years, up to the fourth quarter of 2018. On 1/28/2019, Nvidia got the market off-guard, by cutting down its significant Q4 / 2018 guidance, due to weaker gaming and data-center sales.

Perhaps learning from Apple (AAPL) experience, Nvidia has prepared the market for the worst, and then – when the actual numbers (February 14) – both companies are pleased with investors with more increasing guidance for the coming years.

In the case of Nvidia, the company is guided for flat-to-slight down to FY 2020, still better than the market, more vulnerable, agreed (following 1/28/2019, earlier " preparation ") relying on a 5% decline.

Q4 is an extraordinary, unusual disturbance, and frustrating quarter. Hopefully, we are confident in our strategies and drivers of growth. – Jensen Huang, CEO of Nvidia

Earlier this week, the company announced ~ $ 6.9B acquisition of Mellanox (MLNX). Although, once the deal has started, Nvidia is expected to purchase immediately accretive at non-GAAP gross margin, EPS, and FCF, we do not think this acquisition is to move the needle through too much .

Looking for the most recent data FY:

  • Gross: NVDA: $ 11.72B, MLNX: $ 1.09B (Indicates an increase of 9.3%, assuming zero cannibalization)
  • Net Income: NVDA: $ 4.14B, MLNX: $ 134.26M an increase of 3.2%, assuming zero cannibalization)

So, even though we assume a "total of all parts" (with zero cannibalization), based on previous numbers (and we do not believe NVDA can repeat These are not a game-changer.

While Nvidia is likely to be a better buyer of Mellanox – as opposed to other interested parties like Microsoft (MSFT) , Intel, Xilinx (XLNX), or IBM (IBM) – this does not mean that Mellanox is in the position to create miracles for Nvidia – a good, useful, add-on? that's not!

AMD also comes with a downside guide for Q1 / 2019. The company sees revenues of $ 1.2B- $ 1.3B (compared to the market agreement for $ 1.47B), citing the graphics softness. (Crypto-currency mining inventory is large.)

All in all, everyone speaks / plays numbers in 2019 compared to 2018.

Micron benefited from the marvelous margins (more on that below) translated into an unbelievable EBITDA. To put it in the right context: The most recent quarterly revenue of MU is 3.6x and 5.6x larger than NVDA and AMD, respectively. At the same time, MU EBITDA is 12.4x and 68.5x larger than NVDA and AMD, respectively.

  • Operating Income (Quarterly)

The exact same image (as EBITDA) profit operation. MU (i, e) lives on a (profitable) planet of itself.

Note the sharp decrease of Nvidia's operating income, which it returns to levels that the company sees more than five years ago.

Looking below, and in previous charts, no wonder AMD, a company that grows the highest excellent lineup, and enjoying massive margins (more than the beginning here) – can not translate its growth into an enhanced profitability.

When it comes to the bottom line, the AMD is still a long way.

  • Operating Margin (Quarterly)

We spoke about Micron's unreal operating margin – and there it is. As nvidia gets close, hold the 40% mark not too long ago, MU has made 40% + (and at a point at least 50%!) Over the past 18 months or so. It was nothing short of headaches.

If you ask yourself why AMD is fighting for income development (income) to earn – here is your answer. Too high cost / cost is eating in most growth, leaving too little for shareholders to go home.

  • Profit Margin (Quarterly)

Even greater than operating margin margin of income. Micron will almost open it at a ratio of 1: 1. Every $ 1 of operating profit loses very little along the way to nearly $ 1 of net income.

If only MU continues to run like this forever, I assure you that its stock will not be trading at a multiple of 4-6x for so long …

[MicronesiaTTMP/EisprobablythemostattractiveWallStreetisseenfromacompanyofthatsize)longtimeTheproblemofthecompany/stockisthateveryoneknowsthatthis"goldrush"willcometoanendandthestockusuallyreflectsiteversincethestartbegan

AMD, on the other hand, is trading in multiples that can not be fair from a pure financial perspective. Of course, this is the mirror image of MU, as AMD investors expect and especially the lines below to improve over time, so getting P / E down.

NVDA is (or should be) the "adult in the room", delivering more reliable / consistent results. The last quarter came and changed the cards. We expect NVDA's TTM P / E to cross the 30-mark as soon as possible, on the road to 40!

and other Financial Aspects

If you think of yourself, MU is a bargain, with a forward P / E of 5.2x only – think again. Remember that TTM P / E is 3.2x, so we talk about a 63% increase in bulk. That could be a big ouch for shareholders, unless the profitability does not go down as harshly and quickly as some analysts do not expect.

In light of disappointing profits through NVDA, it's not surprising to see his forward P / E almost meeting AMD in the 30s. This is not the first, nor the last chance this duo can meet in this chart (onward). However, we believe that over time the red line (AMD) is lower than the NVDA (blue line).

And who knows? Within 2-3 years we can have a gathering of all 3 companies, trading on (more or less) the same multiple. That is something we have not seen for a long time. * For Current Fiscal Year, Next Year of Finance, and 2 Years of Finance Previous

] Here are the current earnings of market estimates for the foreseeable future:

Now, let us know the above data a little bit different:

based on Y-Charts data (as of 3/13 / 2019)

What do we learn from this table when it comes to growth in future earnings?

  1. MU has no full growth.
  2. Although NVDA and AMD are expected to grow about the same, on average, AMD growth is expected to be more smooth, stable and consistent, while for NVDA it is more than a future item, following the recent bumps (and assuming the company overcome the ones)
  3. Past growth is really no indication for future growth. The latter will become more soft and slower for these companies.

* For Current Financial Year, Next Year of Finance, and 2 Year Financial Ahead

Here are current EPS estimates in the market for the future:

Now, let's introduce another one data above:

Source: Author, based on Y-Charts data (as of 3/13/2019)

What do we learn from this table when it comes to future income growth?

  1. AMD is in a league of its own. However, it's important to note that AMD comes from a very low point, so it's easy to pass. Furthermore, expectations from AMD to finally start making serious money (bottom line) are a long time. Is this time different (and finally AMD approaches making $ 1 / year)? Only time is to say.
  2. MU is also in league itself, but roughly 3 levels below AMD … The market generally sees the 2018 EPS of MU that gets half to ~ 3 years. If so (ie $ 5.75 EPS) and based on a stock price of $ 40, the bulk will be about 7x, more than doubling the current TTM P / E!
  3. Currently, the market believes that Q4 / 2018 and 2019 will become a soft dent and a short-term delay, in the long-term massive growth story of Nvidia. Like some other analysts, we are quite skeptical that NVDA can grow at a> 30% speed with a brief notice. It seems unrealistic because this level of growth is achieved only during the crypto-boom, where even the company itself is recognized is lost.

How We Play It Out

Let's start with the Advanced Micro Device:

With the above chart in mind, here's how we played / ed AMD, the Wheel of FORTUNE, over the past 16 months :

Note: As soon as we sold the long position on 9/4/18 (No. 4), the $ 20 call we sold on 7/31/18 (No. 3) is open from " covered "in" naked ". The naked sale was covered on 10/30/18 (No. 5b)

Here we are writing to our subscribers about the latest commodity (No. 6) made earlier this week :

This is a sale of a naked (ie without stock ownership) POWER options, so the danger is clearly high!

As you already know, our belief in coming to Semiconductors is extremely weak. As a reminder:

  • Last week, we pulled our "top pick" assignment from Micron (MU)
  • Three weeks ago, we sold a covered call to Nvidia (NVDA) 09/04/2018 we not only sell our long-standing position of Advanced Micro Devices (AMD), but we also sold short shares (ie, reversing our position) at $ 27.28

To make a long story, we did not expect this segment to have good news to raise prices higher than this, even under the pinkish situation.

Additionally, if AMD is overweight (in our view) at $ 27.28 in the past six months, you may think that now, we are less enthusiastic in stock at that price.

The choice we are selling will make us short AMD only if the stock move above $ 26 and devote to us. Although, the net price (where we are short) is $ 27.05 = strike ($ 26) + premium ($ 1.05)

Today, AMD is estimated to report revenue on 4/24/2019, two days before the option expires. Of course, any delays in reporting (on a date older than 4/26/2019) will make this option less risky than currently available (under the assumption that AMD will report revenues two days before the expiry date). The reason for us is simple: (extra) volatility.

Since a large chunk of a selection relates to current and expected stock volatility, the removal of post-earnings move threats will greatly reduce the premium amount here.

In any case, here are the possible sales scenarios for a wired call option:

Note that selling a naked call means that the upside risk is (mathematically) unlimited, because the stock may rise to infinity (and beyond). Therefore, the required margin here is high and is exactly why instead of trading this trade on a relatively short-term expiry date (only 6.5 weeks away); on the other hand, the sale of AMD 07/19/2019 26.00 CALL for $ 2 (almost twice as many) does make a lot of meanings, as 7/19/2019 is likely to fall before the reports of AMD revenues for Q2 / 2019, placing it differently, in both cases it is likely that we only deal with ER up to the expiration date. If you can not lock the locking margin amount required by this trade – do not hesitate to enforce the expiration of July 19 instead of April 26. We play NVDA, in the Wheel of FORTUNE, over the last 17 months:

Note: The last trade on 2/20/19 (No. 4) was made with "double dose": i) covered sales (risk rating: 1 ; the safest) against our long (1/3 of a full) position; ii) naked sale (risk rating: 5; the riskiest), which means the risk is greater.

Here we are writing to our subscribers about the latest trade (No. 4) conducted three weeks ago:

We are serving NVDA before the service launches and we sell it at $ 217. Then, when the stock was acquired in November-December 2017, we opened a smaller (almost 1/3 of what we sold) the position it rides to nearly $ 300 (October 2, 2018)

In mid-2018 we felt that the stock was very expensive so we sold a $ 280 call but the option was not set aside, because the price fell like a rock and at the expiration date, the stock price is more than halved (!)

So we go to the premium we received, but also in stock …

Our revised target stock price is now $ 100 – $ 180; yes, no typos here. We will not be surprised at any move (short-term), up or down. However, as you can see clearly, the downside ($ 60) is 3x the potential reversal ($ 20), so it is clear that we lack belief in the upside, and we are afraid of more than the downside. Therefore, it is very easy to trade for us, as it has no risk for us.

If the option is assigned – we will receive a net (U.S. $ 160 (= strike of $ 160 + premium $ 26) in total (and $ 184.50) higher than the price we paid ($ 184.50) .

If the option is not meant – we get nearly half the risk of downside, upfront. It may be necessary to reduce the pain, when and when …

Since we do not see many opportunities for stocks to trade higher value, we really trade it in both proposed ways / dual helmet :

On the one hand, we sell covered calls that fully protect our long positions. The option must be set, we book them against the sale price, as we usually do with designated options (P & L goes into full stocks).

On the other hand, we do the same trade as a naked sale (obviously for a smaller allocation), which is very dangerous, but we keep it small.

So in the monthly report, you'll see two trades, one rated risk 1 and one with a risk rating 5. Don & # 39;

These are the possible trading scenarios:

Last but not least – Micron

The fact is that we named MU one of our "top picks for 2019 *", including in the information technology sector, when stocks are working with excessive levels of anxiety (including the entire market ) in late December 2018.

We also sold MU 03/15/2019 31.00 PUT option on 01/03/2019 for premium $ 2.75. This option expires today (March 15, 2018) is worthless. You can see the annual return on this trade, as illustrated below (announcing possible occurrences during the sale). However, at the end of February actually "dethroned" MU from his "top pick" assignment after a quick run. [1969] nearly 50% from the peak trough in a matter of just two months!

[” data-width=”635″ data-height=”366″ data-og-image-twitter_small_card=”true” data-og-image-twitter_large_card=”true” data-og-image-twitter_image_post=”true” data-og-image-msn=”true” data-og-image-facebook=”true” data-og-image-google_news=”true” data-og-image-google_plus=”true” data-og-image-linkdin=”true”/> By YCharts

Upon expiration of this option that we have sold, we have no direct and / or indirect position associated with MU .

Outlooks And Target Targets

We've affected each company's own guidance for the next quarter / year, so there's no point in repeating ourselves.

However, Wall Street considers these views when assessing and estimating future earnings.

Below, you can view current EPS estimates over the next two years. Pay attention to the changes that EPS estimates for both NVDA and MU that have passed over the last three months.

Wall Street has reduced expectations by 20% -30% across the board, and this may be the only beginning, not necessarily the end.

 

Pinagmulan: May-akda, batay sa Wall Street Journal Data (bilang ng 3/13/2019)

Kasabay nito, ang EPS estima para sa AMD ay nananatiling napaka-matatag at hindi nagbago ng kaunti. Ang ibig sabihin nito ay isa sa dalawang bagay: alinman sa AMD ay isang napaka-predictable kumpanya (na kung saan ito ay hindi …), o isang mas maaasahan na operasyon (ito ay!) Kumpara sa iba pang mga dalawang semis.

Nakikita ng kalye para sa tatlong kumpanya pagdating sa mga PT, ito ay sa buong lugar, mula sa makaramdam ng sobrang tuwa hanggang sa depresyon.

Tulad ng nakasanayan, hindi namin isinasaalang-alang ang matinding forecast (ie "pinakamataas" at "pinakamababa") at dumikit sa Main Street , na tumutukoy sa average at median na mga pagtatantya, dahil ang mga may posibilidad na maging mas maaasahan at mas mahusay na pagmuni-muni ng pangkalahatang damdamin. Ang pagkakaroon ng sinabi na, pagdating sa inaasahan ng analysts ang aming pangunahing motto ay: Igalang at maghinala; higit pa sa huli kaysa sa dating …

Pinagmulan: May-akda, batay sa Wall Street Journal Data (bilang ng 3 / 13/2019)

Sa pagtingin sa talahanayan sa itaas, narito ang ilang mabilis na mga obserbasyon:

1. Ang MU ang may pinakamataas na potensyal sa nakabaligtad (batay sa average, median, at pinakamataas na PT) pati na rin ang pinakamababang potensyal na downside (batay sa pinakamababang PT).

2. Sa kabila ng pagbibilang sa Wall Street sa AMD upang magsagawa ng mas matatag kaysa sa mga kapantay nito, wala pang karne na naiwan sa buto na ito, sa average at median PTs. Ang paglalagay nito nang naiiba, ang AMD ay medyo pinahahalagahan bilang (isa pang pagbibigay-katwiran sa aming kamakailang pagbebenta ng isang naked na tawag dito).

3. Kahit na ang NVDA ay tila mga benepisyo mula sa isang mas mataas na potensyal na nakabaligtad, kumpara sa AMD, maaari mong makita na kahit na ang pinakamataas na PT ay hindi na pagtaas. Walang taong nag-iisip na ang stock ay matugunan ang 2018 highs anumang oras sa lalong madaling panahon

Bottom Line

Sa pinakamaliit na, 2019 ay magiging isang matigas na taon para sa NVDA at MU, kumpara sa 2018. Habang para sa MU ito ay pagpunta upang maging mas mahaba kaysa sa ito, na may maraming swerte, ang NVDA ay maaaring makabuo ng malakas na muli sa 2020. Ang pagkakaroon ng sinabi na, ang inaasahang tanggihan (sa mga kita ng kumpanya) sa 2019 ay napakalalim na hindi namin mabibili ang lumangoy na maaga sa taong. (19659164) Tandaan na ang aming kaibigan at kapareha, Trapping Value ("TV"), tinantya na ang "NVDA ay pindutin ang (suhay para sa mga ito) lamang $ 2.28 sa kita per share", batay sa pagkalkula na ito :

Pinagmulan: Nvidia: Game Over

Habang hindi kami mabababa ng TV, tiyak na nakikita namin ang stock trading na mas malapit sa $ 100 kaysa sa $ 200 sa loob ng 2019, tulad ng noong nakaraang taon. [19659168AngamingdiskarteditotuladngnakabalangkassaitaasaynangangahulugannadapatNVDAtradessaitaas$160patungosa/sapetsangpag-expire-ibebentanaminangamingmatagalnaposisyonatmagbukasngisangmaiklingposisyonsanetongpresyona$186Tiyaknahindikaminaniniwalanaangstockaynagkakahalaganghigitsanaupangsabihinanghindibababasa

Sa pangkalahatan, ang aming view para sa NVDA ay masira at, dahil dito, ang aming kasalukuyang rating para sa stock ay "isang kondisyong nagbebenta" = hold para sa ngayon, ngunit nagbebenta ~ $ 180-185.

MU ang napakasumpong namin na napakahirap tumawag, dahil hindi kami magulat upang makita ito sa itaas $ 50 / share, o mas mababa sa $ 30. Ang parehong mga kaso ay may mahusay na mga argumento, at ito ay tungkol sa kung paano malubhang ang "pinsala" ay, ngayon na ang mga pangunahing gawain ay sa tuktok. Ang pangunahing tanong ay: Ito ba ay isang unti-unting slide sa kahabaan ng bundok, o higit pa tulad ng paglukso mula sa isang talampas?

Ang aming diskarte pagdating sa MU ay maghintay. Natatakot kami na ang nakabaligtad dito ay limitado, sa liwanag ng mga inaasahan sa merkado na ito ay magiging mas katulad ng pagbagsak ng isang talampas sa halip ng unti-unti na pagsasaayos sa isang pag-urong na pangangailangan para sa mga produkto ng kumpanya. Samakatuwid, sa kasalukuyang sandali ay mas gusto natin ang hakbang sa mga panuntunan at panoorin. Dapat na bumalik ang stock sa $ 20 na maaari naming muling ibalik.

Sa pangkalahatan ang aming pagtingin para sa MU ay masyadong bearish, ngunit hindi namin tinitingnan ang stock bilang masusugatan bilang NVDA. As such, our current rating for the stock is "neutral", but we would be buyers at much lower levels, due to the excessive risk (and limited upside) that we identify here.

The most interesting, and promising, name among this trio is AMD, but even here, most of the growth potential is expected for periods beyond 2019. For us, as you will be able to see below, AMD has always been a valuation story. As long as the company is making peanuts on the bottom line, we deem the stock attractive below $16, and overvalued above $25.

Only once we see AMD making $1/year in EPS, would we start thinking of the stock as possibly worth moving into the $30s to stay there.

Overall our view for AMD is quite bullish for the long-run, just as it has been over the past 16 months. The main problem we see for AMD is its inability (thus far) to translate revenue growth and better margins to net income. AMD isn't a start-up anymore and when such a mature company earns only $0.32/year, there's no way we can justify valuations that represent multiples of 81-107x, when the stock traded at prices of ~$26-$34.

As such, our current rating for the stock is "neutral", as we wait for AMD to "show us the money". There's also the risk that its peer-group (NVDA, MU and possibly even the 3 musketeers: AVGO, QCOM, NXPI) might drag AMD's stock price down along with them.

Don't forget what we always say, and strongly believe in: Macro Trumps Micro. Even the best, most resilient, stock will find it hard, if not impossible, to withstand a stormy, unhappy, market.

Over the long-run, it's macro – global, general, market trends – that rules (and leads) the world, much more than micro – company's specific attributes/news.

You light the skies, up above meA star, so bright, you blind me, yeahDon't close your eyesDon't fade away, don't fade away, oh

Source: "Rule the World" – Take That

All in all, it's safe to say that semiconductors have ruled the world in recent years, up to the end of Q3/2018.

Don't get me wrong: Semis aren't going anywhere, and it's not like we expect this boiling-hot segment to fade away completely. That is true for the trio in this article, as much as it true for the trio in my previous article.

Nevertheless, just as the majestic performance of "Take That", from the London 2012 Olympics Games, Closing Ceremony implies: Semis, you've lit the skies, up above meMany stars, so bright, you've blinded me, yeahDon't close your (production) linesDon't fade away, don't fade away, oh

Sooner or later, you can rule the world (again)!

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Disclosure: I am/we are long NVDA. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (except Alpha Search). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Short NVDA 01/17/2020 160.00 CALL
Short AMD 04/26/2019 26.00 CALL


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