AMD and Super Micro Deliver Strong Earnings as Investors Look Beyond Politics

The stock market is now celebrating Congressional gridlock, President Trump’s willingness to work with the new Congress, and the fact that the Trump Administration may not immediately attack Iran now that new negotiations are anticipated. The earnings environment is simply stunning, so I recommend that investors take the bull by the horns and control their own destiny. As always, our best defense remains a strong offense of fundamentally superior growth stocks, as AMD and Super Micro Computer just demonstrated.

Advanced Micro Devices (AMD) announced that its third-quarter sales rose 44.6% to $13.38 billion compared to $9.25 billion in the same quarter a year ago. During the same period, the company’s earnings rose 94.7% to $2.83 billion or $1.46 per share compared to $1.27 billion or 75 cents per share. Excluding extraordinary items, AMD’s operating earnings were $2.09 per share. AMD posted a 1.9% sales surprise and a 7.7% earnings surprise. What really got investors excited is that AMD’s data center business surged 97% to a record $8.5 billion. Even better, AMD is forecasting fourth-quarter revenue of $17 billion, which was substantially above analysts’ consensus estimate of $16.29 billion.

 Super Micro Computer (SMCI) announced that its latest quarterly sales surged 297.5% to $19.946 billion compared to $5.018 billion in the same quarter a year ago. During the same period, the company’s earnings soared 573.1% to $1.594 billion or $1.75 per share compared to $168.3 million or 26 cents per share. Excluding extraordinary items, Super Micro Computer’s operating earnings were $1.81 per share. The company posted a whopping 26.5% sales surprise and a 46% earnings surprise. Naturally, Super Micro Computer also raised its guidance above analyst consensus estimates.

ADP announced on Wednesday that private payroll jobs rose 86,000 in October, which was above economists’ consensus estimate of a 67,000 increase. All four regions that ADP surveyed reported job growth, led by the South and West with 47,000 and 28,000 jobs, respectively. Small (under 50), mid-sized (50 to 499), and large businesses (500+) all created new jobs. Goods producing jobs rose by 4,000, while service jobs rose by 86,000. Overall, the ADP report was positive, so economists’ expectations for 59,000 payroll jobs on Friday may be revised higher.

****

Louis Navellier and his family own Super Micro Computer (SMCI), and Advanced Micro Devices (AMD).