AMAZON & AMD EARNINGS. my take.
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Amazon and AMD have both reported earnings this week. Both Amazon stock and AMD stock are very popular among retail investors so we must ask were they good or bad earnings. Also, are Amazon or AMD stocks a buy?
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Two stocks have reported earnings in the past two days that a lot of you guys out there actually own are thinking about buying one being Amazon and the other being AMD. I want to talk about both these companies today out well first we’re gonna go through the factual information.
What these companies actually reported for numbers. Okay, then after that I’m going to give you my opinion on these two companies if I’m going to go ahead and buy them, if anything they did in those earnings actually.
Like super impressed me to kind of motivate me to go out and buy shares or do anything like that guy. So let’s just get right into this. So Amazon stock All right, they reported earnings last night and today their stocks for the moving now there’s about 40 minutes left till the trading days over.
But as of right now, the stocks only up point 6% it is a pretty tough day in the NASDAQ overall so that might be holding the stock back a bit. But basically it’s kind of a flattish day for Amazon stock after its earnings.
And that’s pretty rare because a lot of times Amazon stock will move up big or down big based upon their earnings. So the fact that this stock was just flat, the day after earnings is pretty, it’s a pretty rare thing.
Okay. AMD on the other hand, had an amazing day after their earnings. So they report earnings Wednesday night, and on Thursday yesterday, the stock goes up over 14% and then here today stocks up close to 3% once again on a day when the NASDAQ is weak out there guys,so pretty impressive.
Now let’s go ahead and get into all these numbers. And we’ll kind of get into my take on these two stocks. So Amazon, the ETS came in unbelievably strong. Okay, so they did epsg $5.07 versus 250 was expected.
That’s over a double up guys. That’s over a double up of what analysts were expecting there. That’s a big big beat Alright, revenue came in at just under $53 billion. But analysts had expected around 53 point 4 billion.
So it is about a $500 million Miss there and revenue in Amazon Web Services revenue came in stronger than expected came in at 6.1 billion versus $6 billion. Amazon Web Services is really their profit machine there. Okay.
Amazon’s net income saw a whopping 12 fold increase from the year ago period to a record $2.5 billion mark in the third consecutive quarter surpassing $1 billion in profits. Amazon’s quarterly profit top the $1 billion threshold for the first time in the fourth quarter.
2017 profit expansion is largely driven by the growth of Amazon’s high margin businesses like cloud, the thing their web services and also their advertising business, Amazon CFO, Brian said in the conference call that they were the big contributor to profit growth as Amazon’s traditional retail business.
You know, operates on very thin margins as we all know, okay. Revenue guidance for the third quarter fell short of Wall Street estimates. Amazon expects revenue to range from 54 billion to 57 point 5 billion for the third quarter slightly below.
I would say more than slightly below street estimates of between 55.6 and $62.2 billion sales from Prime Day which took place in July will be included in Amazon’s third quarter results their Amazon is a stock right now that has a market cap of approaching $900 billion.
It’s it’s on its way to try to reach a trillion dollar market cap. Trailing p e of 228. Ford P of 90. Okay, now it’s getting to AMD and then we’ll kind of get into my take on things so AMD they beat on EP s and the beat on revenue.
EP s came in at 14 cents. 13 cents was expected revenue came in at 1.7 6 billion or 1.7 2 billion was expected the CEO This is what she had to say it’s been a good start to 2018. She noted the success of the resin line of notebooks and the general strength of the PC market.
I’m very optimistic about what we can do in the notebook business. She said the strong sales come ahead of Sue’s calls for the big season of notebooks including back to school period for the holidays.
We believe this is a multi quarter growth story for us. All right. Jeffrey’s just upgraded the stock here today. Okay, so Jeffrey’s upgraded the stock price from what they’re expecting to be $19 to now $22 expected to hit this year.
Then what they have to say is AMD execution seems to be improving as Intel’s appears to be getting worse, he said expects to ship seven nanometre GPU this year, and it’s seven nanometre epic to in 2019.
We think it will be at parity with Intel’s manufacturing for the first time in recent history. If not ever though, AMD is third quarter outlook came below and what analysts were expecting.
We think will be viewed as a beatable type quarter the analyst says okay, now in terms of AMD, like what are analysts expecting, in this current year, they’re expecting around 25% revenue growth next year.
They’re only expected around 8% revenue growth. So they’re kind of two ways you can look at that. One is growth is gonna slow in a massive way for this company. There is maybe analysts have it wrong in this company is going to be you know.
Grow much faster than what analysts are expected. It depends on what side of the fence you kind of fall on there. But I will tell you what One thing that’s very impressive with this company is the fact that this is a company that last year did 17 cents of APS this year.
They expect to do now 46 cents, okay. And then next year, they’re talking about doing 61 cents of APS, that those are, you know, phenomenal, phenomenal growth numbers there in the APS.
And there’s a company that trades at 124, trailing p e, and about a 31. Forward P. So let’s talk about AMD first, and we’ll get an Amazon AMD. So what’s it What impresses me about AMD is the fact that this company is not profitable.
And they’re growing profits very nicely. Okay. That’s what impresses me about this stock, because historically, this was a company that lost money, time and time and time and time again, and just seemed like they couldn’t dig their way out of the hole.
They just lose money lose money was not profitable company. This was down to a two or $3 stock or just a few years ago, guys, this was a two or $3 stock is come back a long, long way from there. Okay.
So CEO now has the company running good again, I guess you could say. And it’s impressive what they’re they’ve been able to do there. Now, are they behind Nvidia and a lot of their products? Yes, absolutely.
There’s no question about it. I think even most AMD bowls will tell you that, okay, even the ones that are, you know, unbelievably bullish, but at the same time, if they can be there with Intel, or maybe even be ahead of Intel.
And execute better than Intel, like that’s a big thing. I think Intel right now is focused a lot on mobile, where a lot of their focus and attention is on some of the mobile chips and trying to do some things there.
We just saw some some information come out this past week that Apple is going to use an Intel and the next generation of iPhones and they’re going to drop Qualcomm. So Intel a lot of their focus.
In my opinion probably is on the mobile business unit right now. Whereas AMD still, you know, on the historical side, so you know, notebooks and things like that, that you would think about when you think about stock.
So interesting stock, am I gonna go out there and buy it? No, not it’s not for me personally, but at the same time, is it maybe worth the spec play or something like that at a 34 p it’s not too high.
And if they can continue to grow profits for years to come, that P will end up coming down over time as long as the stock price stays around the same. So that’s my feelings are now Amazon. Okay.
You know what I’ve said about Amazon? I just did a video a week or two ago. I feel like Amazon’s overvalued. I still stand by that. That statement. 100% I still believe Amazon’s overvalued now a lot of people are wondering why Amazon stock is not moving up big today.
They just beat massively on APS they did over a double up that’s very rare to see in the in the stock market guys. When so when a company reports APS and it’s a double up over 100% better than what analysts were expecting.
That’s a big time. Okay. People are like, what, why is Amazon stock not moving up? There’s one main factor behind this. I’m actually surprised the stock didn’t sell off today. But I’m not surprised because I understand Amazon’s investor base.
But here’s the thing with Amazon stock, no one that’s an Amazon investor really cares about profitability. If you care about profitability, you’re not going to be invested in a stock that has a 228 current p e and a 90 forward p in the stock. Okay.
So no one that’s in that’s invest in Amazon stock gives a rat’s crap about APS right now. Okay. So although they did over a double up of APS, what does it matter? And that’s why you’re seeing the stock price not move today.
because I was like, okay, who cares? We care about revenue growth. Now, the bad news is they just missed on revenue. They just missed analysts expectations, and then they just missed pretty decently on what the guidance for revenue is.
That’s a double missed sir guys on a stock that is that is dictated by what their revenue growth is. Okay. So I would look at that as a bad sign for Amazon stock in my personal opinion, you miss on revenue for this past quarter.
And then you’re you’re you’re below what Wall Street was expected for revenue for the next quarter. That’s a bad sign. Also, when you take into account the fact that they’ve had a ton of revenue growth coming from the whole food side of their business, okay.
Whole Foods has helped push those numbers up big because Whole Foods is a grocery store at the end of the day. And they have, you know, massive amounts of revenue numbers that they do their whole foods.
It’s a grocery store, okay? Think about Kroger Kroger does over $100 billion in sales a year Whole Foods doesn’t do nearly that. But they still do a massive amount that’s helped to kind of like, like, push up all Amazon’s numbers for the majority of this year.
The problem is now those numbers are going to start laughing and I my opinion, Amazon’s you know, revenue growth will get less impressive. Okay, I’ll get less impressive. It’s already starting to get less impressive.
Now, once everything starts a year over from the whole foods acquisition, that could just kind of weaken things even a little bit more. But absolutely, in my opinion, I still stand by that statement.
That stock is overvalued, nearly $900 billion market cap right now. And although their ETS is increasing, it’s still a ridiculous valuation on that stock, ridiculous valuation. And now they just guys they just missed on revenue numbers.
And they’re expected to come in way under what analysts were expecting. So I would look, the way I look at Amazon stock is it’s a great company. There’s no doubt about it. They’re doing big things.
Does it deserve to be trading around what Apple is trading at right now. In my opinion, not at all this is two totally different companies. Apple’s phenomenal growth. Look what Apple is because Apple is going to report numbers here.
And next week Apple’s report numbers next week, look at the growth Apple has in revenue. Okay, look at the growth in APS Apple is going to have Okay, will it be as much as as Amazon? No, but in terms of the dollar amount.
It’s not even on the same scale guys in Apple’s of stock that trades at like a 15 for P or 14 for P. Okay. And they’ve got phenomenal growth services growing 30% plus clip, okay. And these are two stocks that are traded around the same right now, in my opinion.
Amazon just doesn’t belong to be there. A 400 to $500 billion market cap, in my opinion, is fair for Amazon. Now, am I going to go out and short Amazon stock? Heck, no, I wouldn’t, you can never short a stock just purely based on valuation.
It’s a bad idea. That’s why I won’t shorting Netflix stock, I won’t short Amazon stock, it’s not worth it. Because you’re just trying to short on evaluation, if you’re just shorting on valuation.
That doesn’t work, guys, because what someone else is willing to pay for something versus what I’m willing to pay is irrelevant conversation. Okay, I might be willing to pay $10 for a bottle of wine for this bottle of wine that somebody brings me another person might see that bottle of wine and be like.
That’s worth $10,000 Okay, a gold necklace somebody brings to me I might be like, okay, I’ll pay like 50 bucks for that. Another person might be like, dude, I pay $50,000 for that is a relevant conversation.
If we’re talking about shorting a stock based upon valuation, it’s 100% of the time a bad idea, you have to have something more than valuation and all I have to go on Netflix and Amazon is at the overvalued stock.
I don’t have anything else to go on as far as you know, are their business models going to be completely destroyed or something? I think Netflix has a lot more competition going forward than than Amazon does.
But at the same time, I can’t short either one of those stocks, but I want to know your guy’s opinion on both these stocks. Amazon AMD, what are your insights into both those stocks? Do you own either those stocks I really want to hear from you guys down there in that comment section.
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