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Summary
- Despite the pandemic and selloff in early September, tech stocks have recorded an overall improvement this year.
- AMD stocks saw a surge in price after the company unveiled its latest Ryzen 5000 Series on Thursday.
- Stocks of IBM also soared on Thursday when it announced its decision to break into two separate companies to concentrate on fast-growing businesses like cloud computing.
Shares of American tech giants Advanced Micro Devices Inc (NASDAQ:AMD) and International Business Machines Corporation (NYSE:IBM) are currently rallying on the stock markets. While AMD hit headlines on Thursday with the news of its latest Ryzen 5000 Series release, IBM created quite the buzz with the announcement of it splitting into two companies.
Tech stocks have made an impressive rally since the stock markets tanked in March due to the pandemic onset. The S&P 500 Information Technology currently records a 29.22 per cent year-to-date (YTD) growth. American tech companies have contributed sufficiently to this rally. The NASDAQ-100 Technology Sector Index marks a 21 per cent increase this year, while the NYSE Technology Index reports rise of a 49.1 per cent YTD.
Back at home, the S&P/TSX Capped Information Technology gained 43.64 per cent this year.
Here’s a closer look at the trending stocks of AMD and IBM which Canadian investors have showed interest in:
Advanced Micro Devices Inc (NASDAQ:AMD)
Current AMD Stock Price: US$ 86.51
Shares of Advanced Micro Devices (AMD) Inc shot up since the company unveiled its next-generation Ryzen 5000 Series desktop CPUs on Thursday, October 8. The series contains four new central processing unit (CPU) models —Ryzen 5 5600X, Ryzen 7 5800X, Ryzen 9 5900X and Ryzen 9 5950X — all of which will be available around the world on November 5. In July 2019, AMD released its Zen 2 processors.
There have also been reports recently of AMD being in talks to take over rival tech company Xilinx Inc in a deal possibly worth US$ 30 billion.
A California-based tech giant with a market cap of US$ 101.5 billion, AMD deals in manufacturing processors and other electronic products for computers., AMD is now looking forward to the launch of Zen 3 CPUs by this year-end.
AMD STOCK PERFORMANCE
AMD stocks have climbed nearly 89 per cent this year. The coronavirus-led market crash pulled down its scrips to a low of C$ 38.71 on March 17, but they have since rebounded 123 per cent in seven month’s time.
AMD stock price gained over 77 per cent in the last six months and about 62 per cent in three months. It currently has a 10-day average share trading volume of 51.1 million.
In the last five years, AMD shares have seen a growth of over 4600 per cent in value.
AMD FINANCIAL RESULTS
AMD posted a 26 per cent year-over-year (YoY) growth in its revenue of US$ 1.93 billion in its second quarter ending 27 June 2020. The company said that this climb was driven by its Ryzen and EPYC processor sales.
Its gross margin was up three percentage points YoY at 44 per cent, while its operating income stood at US$ 173 million. AMD expects to make a 42 per cent YoY increase in its revenue in the third quarter of 2020.
Currently, AMD has a debt-to-earnings (D/E) ratio of 0.27, price-to-book (P/B) ratio of 30.6 and a price-to-cash flow (P/CF) ratio of 119.9, as per the data on the TSX.
International Business Machines Corporation (NYSE:IBM)
Current Stock Price: US$ 131.49
The International Business Machines (IBM) announced on Thursday, October 8, that it will be splitting into two separate public companies. The 107-year-old company came up with this decision in an attempt to focus on fast-growing businesses such as artificial intelligence and cloud computing.
The yet-to-be-name new company that will be working on the IT infrastructure will start up next year. The traditional businesses will be spun off in a fresh company called NewCo.
IBM shares surged nearly six per cent during Thursday’s intraday trading after this announcement.
IBM STOCK PERFORMANCE
Stocks of IBM are down nearly two per cent this year. However, they have climbed over 10 per cent in the last six months and nearly 12 per cent in three months.
During the market crash back in March, IBM scrips nosedived to C$ 94.77 (March 24), its lowest level this year. Since then, it has rebounded by 39 per cent in seven month’s time.
In the last 10 days, IBM has recorded an average share trading volume of 3.3 million.
IBM FINANCIAL RESULTS
IBM posted a 5.4 per cent decline in its revenue of US$ 18.1 billion in the second-quarter 2020 earnings results. Its total cloud revenue, however, was up 30 per cent at US$ 6.3 billion.
The company generated about US$ 3.6 billion in net cash from operating activities and returned US$ 1.5 billion to shareholders as dividends in Q2 2020.
IBM had US$ 14.3 billion of cash on hand by the end on the second quarter, including marketable securities. Its debt in the latest quarter, including Global Financing debt of US$ 21.9 billion, amounted to US$ 64.7 billion.
The 117.1-billion market cap company currently has price-to-earnings (P/E) ratio of 13.8, a debt-to-earnings (D/E) ratio of 3.39, a price-to-book (P/B) ratio of 5.6 and a price-to-cash flow (P/CF) ratio of 7.2, as per the data on the TSX. Its return on equity is 41.25 per cent and return on return on assets is 5.10 per cent.
