Advanced Micro Devices (Nasdaq: AMD) And Apple (Nasdaq: AAPL) The market has provided investors with lucrative profits, but these top tech stocks are poised for higher returns in 2021. AMD and Apple cater to some of the most in-demand consumer products this season. That’s the beginning of why these stocks are now being bought compulsorily.
AMD is on fire
AMD is on a list led by CEO Lisa Su, who took over in 2014. Over the past few years, it has provided competitive chip products for PC gaming and data centers. Also, AMD has a strong product pipeline. In particular, its Zen-based 7-nanometer (Nm) processors are likely to miss out on greater market share. Intel, Was delayed in releasing its 7nm chips.
AMD’s Radeon RX6000 Series GPU Image Source: Advanced Micro Devices.
Revenue has increased this year, thanks to the purchase of AMD-powered laptops for consumers to work from home, and a strong demand for server processors. Based on management’s current guidance, revenue will increase by 41% by 2020, driven by the curve of the new Raison, EPOC and semi-custom chips.
In the short term, you can benefit from AMD’s strong sales SonyPlayStation 5 and MicrosoftThe Xbox Series X and Xbox Series S are powered by custom Raison Gen 2 central processing units (CPUs) and AMD Radeon RDNA 2 graphics processing units (GPUs).
The curvature of these console chips led to strong growth in the semi-custom segment last quarter. Management expects revenue to continue to rise in the fourth quarter based on higher demand for new consoles, which Sony and Microsoft will be able to build on quickly.
In October, AMD announced its acquisition Jillinks In all stock exchanges worth $ 35 billion. This agreement represents another future growth catalyst. Jillinks is a leader in high performance computing (HPC) products for cloud, edge and end devices. The addition of Xilinx will extend AMD’s reach of the emerging market for Field-Programmable Gate Lines (FPGAs). It will also open up new markets such as communications and aerospace. AMD says the deal will bring immediate profits.
AMD implements a clear product roadmap. In the fourth quarter Milan begins shipping its next generation of Gen 3 server processors to cloud and HPC customers. The company reached double-digit share of the server market in the second quarter. In the meantime, some of its RDNA2 gaming GPUs can recover NvidiaAMT’s gaming chips offer comparable performance at a slightly lower price, the RTX 30 series. There is ample potential for AMD to gain a foothold in these markets by 2021, which could send more stocks.
Apple produces sleek products and big profits
Apple is as secure as technology stocks are. Its brand power is unmatched, and its growing 1.5 billion active devices offer many levers to boost growth through product improvements, app sales and other services.
Apple’s business strategy is just as beautiful as its products. It has long claimed the simplicity of its Macs, iPhones and iPods playing together through iCloud. The iPhone is the cash cow, which will account for more than half of Apple’s $ 274 billion in revenue in fiscal 2020. But the addition of ancillary products such as the Apple Watch, Airboats and the Homepot Smart Speaker strengthens the bond between users and the ITV ecosystem. .
Each new product release is a layout sale, which can lead to additional product purchases as customer satisfaction rates are very high among iPhone users. For example, Apple introduced the new Airboats Max headphones, which retail for 9,549 and already have three months to wait for delivery.
Apple’s new Airboats Max. Image Source: Apple.
Demand for the iPhone 12 is also strong. Newer iPhones offer 5G connectivity speeds, which may trigger a healthy upgrade cycle, although 5G coverage is now negligible.
Apple is also growing its lucrative service business. It continues to invest in streaming with Apple TV + and will launch Apple Fitness + on December 14th. Revenue from services including Apple Music, Apple Card, Apple Pay, News +, Arcade, iCloud, App Store, Apple TV + and Apple Care – covered 22% of business in the most recent quarter and is Apple’s fastest growing revenue stream.
All of these products and services will lead to billions in cash flow. This allows Apple to invest in the future, while returning money to shareholders through dividends and purchases. Apple generated $ 73 billion in free cash flow in FY20, which currently pays $ 0.205 a quarter in dividends. At the time of this writing the dividend yield is not just 0.67%, but with so much free cash flow each year, the dividend will continue to increase over time. Apple stock appears to be a gift that it will continue to give.