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Advanced Micro Devices (AMD)reported strong Q2 revenue and earnings growth on August 4, but its free cash flow dipped below Q1 levels.
Nevertheless, AMD is undervalued, and a 10% lower short put play yields 3.5% over one month.
AMD closed at$483.36, down 6.8% from $518.58 on Aug.
However, it's up from a recent trough of $429.56 on July 29.
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Sign Up Now! Based on a FCF analysis, it could still be worth over 25% more at$611per share, as this article will show.
Moreover, Wall Street analysts have even higher price targets.
AMD's Q2 revenue rose 50% Y/Y, and its net income was up 163%.
These were better than analysts' forecasts, according to Seeking Alpha.
But the market doesn't care about GAAP accounting earnings anymore.
This is because free cash flow (FCF) shows how much actual real cash the company is generating after heavy capex requirements in this AI-demand-driven age.
FCF fell from$2.566 billionin Q1 to$1.558 billionin Q2, despite being higher than last year.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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