Shares of Lattice Semiconductor (NASDAQ: LSCC) fell as much as 20.1% on Tuesday morning. The maker of field programmable gate arrays (FPGA) reported robust earnings, but modest guidance for the next quarter left investors disappointed. The stock recovered somewhat over time but w
Chip leader Nvidia has been the market darling so far when it comes to AI stocks. With the ongoing artificial intelligence frenzy and its outstanding growth prospects, how high can Nvidia stock rally?
The following companies are expected to report earnings after hours on 10/31/2023. Visit our Earnings Calendar for a full list of expected earnings releases.Advanced Micro Devices, Inc. (AMD)is reporting for the quarter ending September 30, 2023. The electric company company's c
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At Holdings Channel, we have reviewed the latest batch of the 20 most recent 13F filings for the 09/30/2023 reporting period, and noticed that Advanced Micro Devices Inc (Symbol: AMD) was held by 8 of these funds. When hedge fund managers appear to be thinking alike, we find it
Below is Validea's guru fundamental report for ADVANCED MICRO DEVICES, INC. (AMD). Of the 22 guru strategies we follow, AMD rates highest using our Twin Momentum Investor model based on the published strategy of Dashan Huang. This momentum model looks for a combination of fundam
Shares of Advanced Micro Devices
(
NASDAQ:AMD
) are up over 48% year-to-date. The significant growth in AMD stock reflects investors’ optimism over
AI (Artificial Intelligence). AMD sees multibillion-dollar growth opportunities led by AI, which is expected to have a positive impact on its financial performance and stock price. Since the company is a solid AI player, it made us ask who owns AMD.
Now, according to
TipRanks’ ownership page, it’s mostly owned by public companies and individual investors at 58.32%, followed by other institutional investors, mutual funds, and insiders at 22.06%, 18.99%, and 0.63%, respectively.
Looking closely at institutions (Mutual Funds and Other Institutional Investors), Vanguard owns the most significant stake in AMD stock. This is followed by Vanguard Index Funds, which holds a 6.44% stake in the company.
Among the institutions, the Hedge Fund Confidence Signal is Very Positive on AMD based on the activity of 35 hedge funds. Of all the hedge fund managers tracked by TipRanks,
Ken Fisher of Fisher Asset Management LLC has the largest position in AMD stock at roughly $3.07 billion. Next is
Philippe Laffont of Coatue Management, whose investment is valued at $1.59 billion.
Although the Hedge Fund Confidence Signal strongly favors AMD stock, it's noteworthy that individual investors have a negative view of the company. Among the 697,147 portfolios monitored by TipRanks, 3.7% have invested in AMD stock. Despite the prevailing negative sentiment among short-term investors, what stands out is that investors allocate 7.24% of their portfolios to AMD. This suggests that investors are confident about its long-term prospects.
What is the Future of AMD Stock?
Wall Street analysts are bullish about AMD’s prospects and see significant upside potential in its stock from current levels. The company will likely get a boost from the rapid adoption of AI, which will drive its data center revenues and provide a multi-year growth opportunity. Moreover, new product launches and recovery in the PC market will support its earnings growth.
These positives are reflected in analysts’ optimistic outlook on AMD stock. With 22 Buy and seven Hold recommendations, AMD has a Strong Buy consensus rating. Further, the
average AMD stock price target of $136.18 implies 41.59% upside potential from current levels.
Disclosure
For Immediate ReleaseChicago, IL – October 31, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the fi
The Meet Kevin Pricing Power ETF (
NYSEARCA:PP) is an interesting actively-managed ETF that may catch the eyes of investors with its unique name or with its 22% year-to-date return. However, despite this strong 2023 performance, caution is likely warranted going forward for two key reasons. I’m neutral on PP based on its heavy concentration risk and its sky-high fees.
What is the PP ETF’s Investment Process?
PP is an actively-managed ETF that seeks to achieve long-term capital appreciation by investing in what it calls U.S.-listed “innovative companies,” according to mketf.com.
The fund manager defines these innovative companies as those that are “involved in the development of new products or services, technological advancements, consumer engagement, and/or disruptive approaches with respect to business growth that the Sub-Adviser expects to have a significant impact on the market or industry in which the company operates.”
PP will then invest in “Innovative Companies that, in Kevin’s view, also have more ‘pricing power’ than their peers.” Meet Kevin (the fund manager) defines pricing power as the “ability to potentially increase prices for products and services without a corresponding drop in demand.”
To select the innovative companies that the fund will invest in, Kevin then screens an "extremely large initial universe of U.S.-listed companies with a minimum market capitalization of $100 million utilizing a proprietary screening methodology. Then, Kevin analyzes the remaining initial universe of companies to identify those innovative companies that Kevin perceives as having pricing power versus their peers."
These are all good traits to look for when investing in a company, but this approach also leaves quite a bit up to the discretion of the fund manager.
At this point, it might be a good time to take a quick detour and ask, who is the eponymous "Kevin" of the Meet Kevin Pricing Power ETF?
Who is Kevin?
The Kevin of “Meet Kevin” is Kevin Pathraff, a popular YouTube personality with nearly 1.9 million subscribers. He describes himself as a licensed financial advisor and real estate broker, and he is also a commentator on topics including finance, politics, and news. He is perhaps best known as a real estate investor whom
Curbed described as a “landlord influencer.”
He also ran as a Democrat to replace California governor Gavin Newsome during the 2021 gubernatorial recall election, where he won 9.6% of the vote but ultimately came up short.
Meet Kevin's Holdings
One key reason for caution with the PP ETF is that there is quite a bit of concentration risk here. The fund holds just 16 positions, and its top 10 holdings make up 85.8% of the fund.
Below, you’ll find an overview of
PP’s top 10 holdings using TipRanks’ holdings tool.
Perhaps most concerning, top holding Tesla (
NASDAQ:TSLA) makes up a quarter of the fund’s assets. This has been a great thing for PP investors this year, as shares of Tesla surged and took the price of PP with it, but Tesla is a volatile stock, and this outsized position in the firm can lead to a lot of downside for PP investors if Tesla slumps.
Similarly, PP also has fairly large positions in both Enphase Energy (
NASDAQ:ENPH) and Nvidia (
NASDAQ:NVDA) of 13.4% and 10.0%, respectively, meaning that nearly 50% of the fund's assets are in just these three stocks.
Furthermore, many of these holdings are what you could call priced for perfection. For instance, Tesla trades at 63.7 times earnings, while Nvidia trades at nearly 100 times earnings. Other top holdings like Advanced Micro Devices (
NASDAQ:AMD) and The Trade Desk (
NASDAQ:TTD) trade for 35.1 times earnings and 261 times earnings (53.8 times forward earnings), respectively. When stocks trade with valuations this high, they can go down quickly when things go wrong.
Part of the reason that investors use ETFs is to gain diversified exposure to specific sectors of the economy or large swaths of the stock market, which helps to limit downside risk, but you aren’t going to benefit from that in a fund with this much concentration in just a handful of stocks.
Sky-High Expense Ratio
The other reason for caution with the PP ETF is its strikingly high expense ratio of 0.77%.
An expense ratio of 0.77% means that an investor allocating $10,000 into this fund will pay $77 in fees in year one, which is pretty steep. But that’s nothing compared to how these fees can compound over time. Assuming the fund returns 5% per year going forward and keeps this expense ratio, this same investor will pay $246 in fees over the course of three years. Over the course of 10 years, the investor would pay $1,155 in fees, meaning that well over 10% of their initial investment would be eaten up by fees.
Is PP Stock a Buy, According to Analysts?
Turning to Wall Street, PP earns a Moderate Buy consensus rating based on 12 Buys, five Holds, and zero Sell ratings assigned in the past three months. The
average PP stock price target of $28.36 implies 39.1% upside potential.
Investor Takeaway
PP is a unique ETF with an interesting strategic focus, and I’ll give the fund credit for that. It’s also done very well for its holders year-to-date, and its active manager picked some strong winners this year, which it also deserves credit for. However, I’m also concerned about the fund’s high level of concentration in just a small number of expensive stocks, which could see these year-to-date gains quickly go in the other direction (as they have recently) if disproportionately large positions like Tesla or Nvidia struggle.
The ETF’s expense ratio of 0.77% is also quite high. In fairness, PP is an actively-managed ETF, so it’s natural that its expenses are going to be higher than those of an index fund. However, this is still a lot to pay for a new ETF that is yet to establish much of a long-term track record, or really any ETF for that matter.
You can alternatively invest in ETFs like the Invesco QQQ Trust (
NASDAQ:QQQ) or the Technology Select Sector SPDR ETF (
NYSEARCA:XLK) that give you exposure to the same stocks like Tesla and Nvidia for a fraction of the price. QQQ’s expense ratio is 0.20%, while XLK’s is just 0.10%. Plus, these funds have built up strong track records of consistent success over many years, whereas PP has not been around for long enough to do this, having launched in November 2022.
The ETF is certainly an interesting one, but for these reasons, as they say on
Shark Tank, “I’m out.”
Disclosure
Monday, October 30, 2023The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including JPMorgan Chase & Co. (JPM), The Home De
In today's video, I discuss recent news affecting Apple (NASDAQ: AAPL), Intel (NASDAQ: INTC), Advanced Micro Devices (NASDAQ: AMD), Qualcomm (NASDAQ: QCOM) and other semiconductor companies in the CPU market. Check out the short video to learn more, consider subscribing, and clic
Advanced Micro Devices AMD is expected to report growth in the Client segment, both on a year-over-year and sequential basis, in third-quarter 2023 earnings, set to be released on Oct 31.AMD’s third-quarter top-line growth is expe
It’s the start of the busiest week of Q3 earnings season, and pre-market futures are up. Perhaps this is a sign of optimism for expected earnings, or perhaps it’s looking favorably on a parade of economic reports out this week. Pe
It’s the start of the busiest week of Q3 earnings season, and pre-market futures are up. Perhaps this is a sign of optimism for expected earnings, or perhaps it’s looking favorably on a parade of economic reports out this week. Pe
In today's video, I discuss Advanced Micro Devices (NASDAQ: AMD) and what semiconductor investors should watch during its upcoming earnings. Check out the short video to learn more, consider subscribing, and click the special offer link below.
Last week saw both bad news and good news come the way of Intel (NASDAQ: INTC) shareholders. Early in the week, Reuters reported that both Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) were at work designing Arm (NASDAQ: ARM)–based PC processors by 2025, in a cha
Semiconductor company Advanced Micro Devices
(
NASDAQ:AMD
) will release its third-quarter financial results on Tuesday, October 31. Analysts see a sequential and year-over-year improvement in its top and bottom lines in Q3, led by new product ramps across the Data Center and Client segments.
In a note to investors dated October 16,
TD Cowen analyst Matt Ramsay said, “After a 1H23 characterized by the dramatic shift in spending towards GenAI, we view headwinds as beginning to ease as evidenced by the company's 3Q guidance issued on the prior earnings call.” Encouraged by the company's forward guidance, Ramsay is bullish on AMD stock and has a price target of $135.
With this backdrop, let’s look at Wall Street’s consensus estimates for AMD’s third quarter.
AMD – Q3 Expectations
Wall Street expects AMD to post revenue of $5.70 billion in Q3, which compares favorably to the
prior-year quarter’s revenue of $5.57 billion. Moreover, analysts’ Q3 revenue projection shows a sequential improvement and is in line with the company’s guidance.
During the Q2 conference call, AMD’s management said that the Client and Data Center segments will register double-digit growth on a quarter-over-quarter basis in the third quarter. This is expected to boost the company’s overall revenue. However, the Gaming and Embedded divisions may continue to face challenges.
On the bottom line, analysts expect AMD to post earnings of $0.68 per share, compared to an EPS of $0.67 in the prior-year quarter. Moreover, AMD’s Q3 EPS is expected to show a sequential improvement. Notably, it reported an EPS of $0.58 in the second quarter.
As analysts see improved financial performance from AMD in Q3, let’s look at their recommendations ahead of Q3 earnings.
Is AMD Stock Expected to Rise?
Analysts see considerable upside potential in AMD stock over the next 12 months. Further, they remain bullish on the stock ahead of earnings.
AMD stock has received 22 Buys and seven Holds for a Strong Buy consensus rating. Meanwhile, the
average AMD stock price target of $137.29 implies 42.37% upside potential from current levels.
Insights from Options Trading Activity
Options traders are pricing in a +/- 8.17% move on earnings, greater than the previous quarter’s earnings-related move of -7.02%.
Bottom Line
AMD’s third-quarter financials are expected to get a boost from the easing of headwinds in the Data Center and Client segments. Moreover, new product launches will support its earnings growth. Over the long term, AMD sees multibillion-dollar growth opportunities led by strong demand for
AI (Artificial Intelligence). These positives are reflected in analysts’ bullish outlook on AMD stock.
Disclosure
TipRanks
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