How to Buy AMD Stock in 2021

Advanced Micro Devices (NASDAQ:AMD) is one of the world’s most successful semiconductor companies. Its microprocessors, chipsets, and graphic components are used in personal computers, servers, and gaming consoles across the world.

Headquartered in California, AMD stock has been listed on the NASDAQ since 1972. Over the past 5 years, AMD’s stock price has vastly outperformed both the S&P 500 and the Nasdaq composite indices. At the time of writing, its market capitalization exceeded $65 billion.

Looking to buy AMD stock? This guide will review some of the best brokers to choose, walk you through how to place your first trade, and highlight some of AMD’s key selling points to help you in your investment decision!

3 Simple Steps to Buy AMD Stock

Don’t have time to read our guide? If you’re in a hurry, simply follow the following 3 steps to buy AMD stock!

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Where To Buy AMD Stock

How To Buy AMD Stock Using eToro

Step 1: Search for Advanced Micro Devices (AMD) stock

Using eToro’s search function, look for “Advanced Micro Devices” or “AMD”. In addition to financial instruments, the search tool allows you to find other traders on eToro’s platform, which you can use for copy trading.

Step 2: Click on “Trade”

When you have decided to buy or short AMD stock, you can access the transaction window by clicking “Trade”. Always remember to check whether you’re using your real portfolio or eToro’s free demo account (“Virtual Portfolio”)!

Step 3: Select your order type, the amount and the options you want

In the transaction window, you will see a range of options to specify your trade.

If you choose to buy AMD stock, unleveraged orders will be executed directly and commission-free. Short and/or leveraged trades on AMD stock will be executed via CFDs.

You can choose the number of units of the stock or the specific dollar amount you want to trade.

You may also choose to apply leverage or use special order types (take-profit, stop-loss) for your trade. Last, for all CFD trades, you will see the daily rollover fees displayed at the bottom.

Before executing the trade, make sure you have conducted your own, thorough research (particularly if you are using leverage!).

When you are ready, click “Open Trade”.

 

Company Background

AMD is a leading global semiconductor company based in California and listed on the NASDAQ.

The company manufactures a wide range of computing products, including microprocessors (AMD Ryzen, AMD EPYC etc.) and chipsets (X570, B450) for personal computers and servers. AMD also manufactures graphics products, including the famous AMD Radeon series, used in personal computers & servers around the world.

It mainly sells its products to original equipment manufacturers (e.g. PC or gaming console makers), data centres, and independent distributors around the world.

AMD primarily competes with the Intel Corporation in the microprocessors realm, and with Nvidia Corporation for graphical processing units (GPUs).

As of December 31st, 2019, AMD employed approximately 11,400 people worldwide and generated $6.7 billion in revenues (up 4% year-on-year).

Its main division, Computing & Graphics (selling high-volume processors & GPUs), accounted for 70% of its revenues, with its Enterprise, Embedded & Semi-Custom (selling specialized equipment for gaming consoles, servers & data centres) making up the rest.

At the time of writing, the company had a market capitalization of $67.8 billion.

 

AMD Stock Performance

AMD has had a strong start to 2021, up just over 14% since January 1st at the time of writing. In 2019, AMD was the top-performing stock in the S&P 500, up 148%, beating its remarkable 80% return in 2018.

It benefited from strong sales growth across the board, particularly as its Ryzen processors continued to gain market share from Intel. With Sony and Microsoft set to launch their next-gen PlayStation and Xbox gaming platforms later this year and AMD set to supply the necessary chips, analysts expect further growth in the Semi-Custom segment.

The coronavirus-induced boost to the PC and gaming markets heralds more good news for AMD, who will benefit from growing demand for its chips & GPUs. In addition, worldwide stay-at-home orders are spurring massive growth in demand for data centers to power the internet, forecasting more growth alleys for AMD stock.

At the time of writing, the median analyst consensus was $50 with a high of $66, and ratings split between “Buy” and “Hold”.

 

Why Invest in AMD?

AMD is one of the world’s leading semiconductor companies, second only to Intel. Its microprocessors, chips, and GPUs power millions of PCs, gaming consoles (including the upcoming new PlayStation and Xbox), servers and data centers around the world.

As the best-performing stock on the S&P 500 in 2019 and one of the top performers in 2018, AMD stock has historically been very lucrative for stock trading investors.

Past performance alone is no indication of the future, but there are many reasons to be enthusiastic about AMD’s prospects. Deciding to invest is a personal call that must be informed by thorough personal research. But to help you get started, we list below 4 aspects that make AMD an attractive stock to buy:

1. Strong top-line growth

In 2019, AMD recorded $6.7 billion in revenues, up 4% year-on-year, and 11% per year on average for the past 5 years.

All of AMD’s growth in the past 3 years has come from its Computing & Graphics division, mostly explained by price increases due to high demand together with modest increases in shipment volume. Going forward, an increase in demand for PCs and growth in the gaming market sets AMD’s microprocessors and GPU units for further growth.

While its Enterprise, Embedded, and Semi-Custom divisions have shrunk in size in recent years, increased demand for data centres (due to the coronavirus-induced internet boom) and the release of the new PlayStation and Xbox devices later this year should bring the division back to growth.

2. Growing margins

Thanks to price increases and operational improvements, AMD has significantly grown its margins in the past 3 years, with Gross Margins going from 34% in 2017 to 38% in 2018 and 43% in 2019.

With 13.7% EBITDA margins and 9.4% EBIT margins (up from negative just 2 years earlier), AMD is on the right track. In 2019, its operating cash flow margin was 7.3%, up substantially year-on-year.

Last, although it had failed to turn a profit for several years, AMD’s profit margins have been positive since 2018 and steadily rising to 5.1% at year-end 2019.

3. Promising and fast-improving returns

At year-end 2019, AMD generated remarkable returns, with a return on equity (ROE) of 15.7%, return on assets (ROA) of 6.4%, and return on invested capital (ROIC) of 11.3%.

While these returns still trail those of archrival Intel, they have been growing very fast quarter-on-quarter and are expected to keep improving as AMD finds its footing in key markets.

4. Strong net cash position

Despite AMD’s large spending in R&D, its debt load is small ($486 million) compared to its cash pile of $1.47 billion. With $631 million in EBIT, AMD can cover its interest expenses more than 6 times over, placing it in a comfortable position.

In addition, AMD’s cash flows from operations have improved greatly in the last 3 years, making it sufficiently cash-flow positive to reduce dependency on additional funding.

Thanks to its deleveraging trend in recent years, AMD’s credit rating was upgraded in 2019 from BB- to B by S&P, highlighting an improved credit profile.

Should I Buy AMD Stock?

As we discussed, AMD is a leading player in the global semiconductors industry, on track for further profitable growth despite a rocky past. AMD stock’s earth-shattering performance in 2019 and the company’s future prospects have made it an attractive target for stock investors.

We cannot, however, give you specific investment advice, and the decision to buy AMD stock rests on your shoulders. To go further, we highly encourage you to read AMD’s SEC filings, review its financial statements & press coverage, and look for broker & analyst reports on the company. Ultimately, understanding the risks and the upside potential is crucial to guide your decision.

Investing in the stock market can be tough and time-consuming, but also incredibly rewarding. For additional resources, have a read of our stock investing and stock trading guides!

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