AMD, Why the stock surging makes sense, from a technological standpoint.
Advanced Micro Devices, Inc. (AMD) will be announcing its Earnings report later today after living one of the best weeks of its 51 years history. As many of you will know AMD, has been trailing INTEL (INTC) on the CPUs marketplace for the last 3 decades and Nvidia for a little bit over 2. The California based company has been taking important steps to stand a little bit closer to both of them, specially to Intel. I hope to help you understand why from a technological standpoint it makes sense that the company’s stock has risen so much.
How has AMD transformed?
We would have to take a quick look at Lisa Su first. Current CEO and member of multiple boards in the Semiconductor Industry, this MIT graduate took over of the company in October of 2014 when the stocked traded at $1.93 USD. Since then it defined streamlining the product line, diversifying the line of business outside of the PC market, and, accelerating the development of new technologies. Sounds simple right? Well here is a little bit more information about it.
1. Since AMD has only made their positions in gaming and other industries stronger by developing Accelerated Processing Units (APUs) and semi-custom chips design ideal for video consoles.
2. Streamline Product: Target the datacenter industry and embedded devices production.
3. Developing of a new architecture for their CPUs which was announced in 2017 with the launch of the Zen chips, or as it is better known: Ryzen.
How has the company delivered?
1. Gaming Industry, by Feb 2015, 40% of AMD sales came from Non PC devices, growing from just a 10% in 2012. This has lead AMD to secure the design and development of dedicated chips for both the PS4 and XBOX Series X by placing their Zen 2 (CPU) and RDNA 2 (GPU, Graphics Processing Unit) architectures inside them.
2. Since the launch of the Zen architecture in 2017 AMD share of the CPU market (compared to Intel) has increased from a 18% (it’s all time lowest) to a 40% in Q1 2020 (numbers not seen since 2006). Tycoons of the industry like Microsoft, have started to include AMD CPUs on their latets line of surface products.
3. Focusing on the datacenter industry has allowed the California based semiconductor company to, with their high performing line of processors for working stations and servers Ryzen Threadripper, to license server chips designs in China, increasing their footprint in the datacenter space.
This is why without looking at the fundamentals it makes sense that AMD stock has risen over 34% in the last month. Not only with Su’s guidance they were able to trace a map, but they have successfully delivered since 2014 on their mission with excellent, well priced product without compromising power. Additionally, while its bigger competitor just announced that it was delayed on the delivery their 7nm CPUs, not only AMD already has a 7nm chips but they are already working on leapfrogging the industry with a 5nm architecture to be launched in 2022.
Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.