AMD Goes on Sale

If you remember learning to ride a bike, or have ever watched someone learn to ride a bike, you’ll be familiar with what that process looks like.

Starting out is tough. Maybe the new bike rider can ride for a second or two before falling over.

As the learning progresses, a sense of balance is learned.

Gradually, the rider can ride for longer periods of time before toppling over.

Learning to ride a bike, like lots of other forms of progress, can be ugly.

When all is said and done, it looks completely natural. It's hard to imagine Lance Armstrong struggling to balance a bicycle. However, once upon a time, he was just getting his footing.

As the market changes and companies change, the process can look a bit like the early stages of riding a bike.

One step forwards, two steps backwards.

Progress typically happens gradually.

The trouble comes in when investors expect the progress to happen in an unrealistic time frame.

Unfortunately, we are seeing a bit of this in the market today.

It’s Time to Be Patient

Advanced Micro Devices, Inc. (AMD), one of the world’s leading chipmakers for PCs and servers, is down about 8.5% after releasing first quarter earnings this morning.

Now, the company didn’t do anything wrong.

Sales were up 2% from last year, a bit more than analysts expected.

AMD’s data center business, which is a big component of AMD’s AI business, is up 80% from a year ago.

These data center servers are selling so well that the company told Wall Street that it expects to make $4bn in AI servers this year, 14% more than it was previously anticipating.

Although AMD’s data center business is growing rapidly, investors were hoping for more.

Which brings us to today’s tumble.

Quite frankly, it seems that investors were hoping for AMD to produce some kind of miracle.

The company has its work cut out for them.

Despite AMD’s substantial progress in capitalizing on AI, AMD’s server sales are still just 5% as much as Nvidia's.

On the flip side, this also means that AMD has a lot more room to grow by stealing market share from Nvidia.

While AMD wasn’t able to produce any miracles this quarter, the company continues to put up solid numbers in the absolutely massive AI market.

As I’ve said before, AI has the potential to create even more wealth than the internet.

But, this process takes time. 

Long term patience will pay off big. My investors who held on when Bitcoin dropped from $10,000 to $5,000 are now sitting on $55,000 in gains. 

AI is no different (in fact, probably bigger).

While the market impatiently wants AMD’s AI supercomputers to take over the world and enslave humanity as soon as possible, the reality is we’ll have to wait.

AI is a long term play that's not going away anytime soon. 

If you’re new to the market, today could be a good opportunity to buy the dip in shares of AMD while they are on sale. Despite the bumps in the road, I’m just as bullish as ever on AMD (I might even buy a bit later today).