AMD 2022 numbers and next year outlook published on Tuesday are in stark contrast with market perception.

AMD is a very successful high-end chip manufacturer. Lisa Su is the highly respected CEO who engineered a spectacular turn-around at AMD in the past 5 years. In 2022, AMD share price collapsed. It is a surprise to see that revenue rose 20% last year and Gross Margin improved 71 bp to 70% thanks to an improved product mix. As expected, AMD reported falling sales in PC and gaming. However, this was more than offset by a 41% rise in data centers powered by a mix of strong end demand and share gains. This confirms the comments made by Microsoft last week: technology is suffering from significant cyclical headwinds In PC and gaming and enjoying strong secular growth in data centers and the cloud. In 2023, AMD CEO expects the overall demand environment to remain mixed with the second half stronger than the first half.

AI is shaping as the next growth driver. In the words of Lisa Su: “Over the next several years, one of our largest growth opportunities is in AI, which is in the early stages of transforming virtually every industry service and product. We expect AI adoption will accelerate significantly over the coming years and are incredibly excited about leveraging our broad portfolio of CPUs, GPUs and adaptive accelerators in combination with our software expertise to deliver differentiated solutions that can address the full spectrum of AI needs in training and inference across cloud, edge and client.”

AMD is one of the most striking examples of the huge gap created in 2022 between perception and reality.

Revenues have tripled in the last three years. EBITDA margin stands at 25% vs 10% in 2019. Shares are down 28% in the last 12 months underperforming the S&P index by 18% and trade at a 5-year valuation low.

That sounds strange for a well-managed high-growth, high-margin, debt-free business.

 Note : Deshima Smart Data Certificate has a position in AMD.