Analyzing Advanced Micro Devices (AMD): A Cyclical Investor’s Perspective

PUBLISHED Apr 10, 2025, 11:16:57 PM        SHARE

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imgThe Cyclical investor's Club on YouTube

Corey Kramer, host of the Cyclical Investors Club YouTube channel, recently shared his insights on Advanced Micro Devices (ticker: AMD). Known for its pivotal role in the semiconductor industry, AMD presents a textbook example of a deeply cyclical business. Below, we’ll explore Kramer’s analysis and strategy for investing in this high-quality yet volatile stock.

Why AMD Attracted Attention

  • Cyclical Nature: AMD, like most semiconductor businesses, experiences significant fluctuations in earnings due to its reliance on fixed overhead and variable demand for its products.
  • Historical Volatility: AMD’s earnings have historically gone through periods of deep decline, followed by significant recovery. This cyclicality makes it attractive for strategic investors with a long-term perspective.

Kramer’s Investment Approach

  1. Analyzing Historical Data: Kramer begins his analysis by examining AMD’s earnings trends during past downturns. He looks for businesses that not only recover after downturns but also achieve higher highs during successive peaks.
  2. Evaluating AMD’s Evolution: Historically, AMD struggled to recover pre-recession highs for over a decade, which initially kept Kramer from investing. However, the company’s shift towards a secular growth phase more recently has changed his perspective.
  3. Avoiding Overpayment: By waiting for AMD’s stock to reach a significant discount (e.g., a 65% decline from its 2021 peak), Kramer ensures he buys at a price that allows for meaningful upside.

The Case for AMD

  • Recovery Patterns: During its recent decline, AMD offered an attractive entry point for cyclical investors. Kramer capitalized on this by buying the stock near its bottom.
  • Sector Leadership: AMD has increasingly positioned itself as a leader in the semiconductor space, outperforming competitors like Intel in certain areas.
  • Long-Term Growth Potential: With the rise of AI and other tech trends, AMD benefits from growing demand for its products, adding a layer of secular growth to its cyclical earnings.

Challenges and Caution

  1. Earnings Cyclicality: The nature of the semiconductor industry means AMD’s earnings can swing drastically during economic downturns.
  2. Market Hype: Recent excitement around AI-related technologies has driven AMD’s stock price higher. While this may create short-term volatility, Kramer remains cautious about speculative bubbles.
  3. Timely Profit-Taking: In response to AMD’s rapid recovery post-decline, Kramer chose to sell half of his position earlier than usual, balancing long-term growth potential with risk management.

Kramer’s AMD Investment Outcomes

  • Strategic Buys: Kramer’s disciplined approach allowed him to catch AMD near the bottom of its 65% decline from 2021 highs.
  • Tactical Sales: By selling half his position during a rapid recovery, Kramer protected his gains while still maintaining exposure to AMD’s long-term growth.

Consider Joining the Cyclical Investors Club

For investors keen on leveraging cyclical patterns to maximize returns, Kramer’s services offer invaluable support:

  • Weekly Stock Picks: Exclusive recommendations for high-quality stocks through his Patreon service.
  • Comprehensive Analysis: In-depth discussions and updates on stock investments via Seeking Alpha.
  • Community Access: Direct messaging and community interaction to navigate market fluctuations.

Conclusion

Advanced Micro Devices serves as a compelling example of a cyclical stock with strong recovery potential and long-term growth opportunities. By combining disciplined analysis with a strategic approach to buying and selling, Corey Kramer demonstrates how investors can achieve superior returns with cyclical businesses like AMD. For those interested in navigating the complexities of cyclical investing, AMD is a prime case study worth following.

https://youtu.be/DWkiLCQqLms?si=-cmKFiMvcQQVVmOw



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