Advanced Micro Devices CEO says the chip designer is gaining share. We say buy the stock

Published Wed, May 4 20221:56 PM EDTUpdated Wed, May 4 20222:05 PM EDT

Advanced Micro Devices (AMD) is gaining share in important markets such as data centers and personal computers, CEO Lisa Su told CNBC on Wednesday. Her comments came as shares of Club holding AMD jumped Wednesday, following the chip designer's better-than-expected first-quarter earnings report and forward guidance after the closing bell Tuesday. Since becoming AMD's CEO in late 2014, Su engineered a remarkable turnaround of a company near bankruptcy and in the shadow of then-semiconductor juggernaut Intel . AMD's revenue has surged from $5.5 billion in 2014 to $16.4 billion last year, and net income grew from a loss of $403 million to a profit of $3.16 billion over that same period. To say she's righted the ship almost feels like an understatement, and Su sees even brighter days ahead, suggesting some of AMD's success has come at the expense of Intel, which has stumbled in recent years, and other rivals. "We gained revenue share in our key markets," Su told Jim Cramer , who directly asked her whether Intel was actually taking share from AMD. The two companies primarily compete on server chips and PCs. Su didn't hesitate to push back on the assertion. "We believe we gained server share. We doubled our server business year on year. We grew in cloud and enterprise," she said, stressing they're "extremely good markets in terms of their need for high performance." The AMD boss then turned her focus to PC processors, where Intel has long been the leader. "We believe we gained share on the client PC side and that's really on the strength of our product portfolio." AMD's computing and graphics segment, which includes its PC sales, grew 33% in the first quarter to $2.8 billion. This shows the company's focus on the higher end of the PC market, such as gaming, is paying off. By contrast, Intel said last week its segment that includes PC chips saw revenues decline 13% year over year in its first quarter to $9.29 billion. That was below the $9.42 billion analysts expected, per Refinitiv. "At the end of the day, there's still investment in things like commercial and things like gaming and these kinds of areas, and that's where we've optimized our portfolio," Su said. "We believe we've gained revenue share, and our goal is to continue to put great products out there because there is demand when we have a very strong portfolio." Bottom line "I've known this company since 1985. Best quarter they've ever had," Cramer said on the Club's "Morning Meeting" video livestream Wednesday. He predicted the stock will be able to regain its upward climb. "You want to buy it. If you just joined the Club, you want to buy AMD and then you buy some more if it actually goes lower," Cramer advised. We have AMD rated as 1 , meaning we see the stock as a buy at these levels. As shareholders, Su's optimism about AMD's businesses is noteworthy in general. But Wednesday's remarks take on more importance when considering the big picture for the chip market right now. There are concerns that demand for chips may be slowing in the near term, especially in PCs after the Covid pandemic contributed to a surge in sales, possibly pulling some purchases forward. It's one reason why many semiconductor stocks, AMD included, have been crushed this year. Against that backdrop, it's particularly good to be invested in a company that is expanding market share — strengthening its standing in the industry — in the face of potential industry softening. Put another way, if the overall pie is stagnating but your slice of it is getting bigger while a rival's gets smaller, that's OK. AMD's ability to grow share despite broader PC slowdown concerns is similar to what we saw last week from Club holding Qualcomm (QCOM) in its primary market of handsets. Despite worries about smartphone demand slowing, Qualcomm grew handset revenue in the quarter by 56% year over year and projected full-year growth north of 50%, due in part to higher sales in premium segments. The company also said the strength is due to share gains in Samsung's flagship device, the Galaxy S22. (Jim Cramer's Charitable Trust is long AMD and QCOM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Lisa Su, president and chief executive officer of Advanced Micro Devices (AMD), holds a 3rd generation Ryzen desktop processor while speaking during a keynote session at the 2019 Consumer Electronics Show (CES) in Las Vegas, Jan. 9, 2019.

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