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Wednesday, February 8, 2023

Advanced Micro Devices Stock Should Get Un-Stuck Soon

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To call Advanced Micro Devices (NASDAQ:AMD) stock a “runner” would be no exaggeration, at least from a long-term perspective. Up more than 2,000% since 2015, the shares have enriched patient investors with market-beating returns.

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The first half of 2020 has tested AMD stock traders’ patience, however. The share price has been stuck in a frustrating range since January. While some lesser-known names are shooting to the moon, AMD shareholders are still waiting for their time in the sun.

Should AMD stock traders just give up and move on to something else? That would be an unnecessary mistake as patience has consistently rewarded AMD shareholders. Besides, there are compelling reasons to bet on higher prices as 2020 moves towards its second half.

High Hopes for the Back Half

If the first half was ho-hum for AMD stockholders, what catalysts are on the horizon for the back half of 2020? For Northland analyst Gus Richard, an important contributing factor towards “a strong 2H for AMD” is the company’s “robust product cycle.”

The idea here is that companies can perform well even during a pandemic if they offer a strong product lineup. That will be the difference maker throughout the second half of 2020, particularly in the microprocessor niche.

Richard evidently sees Advanced Micro Devices’ product lineup as a growth driver even if the overall economy continues to struggle. “In our view, AMD is well positioned for 2H:20 as new game consoles launch for the holiday season, and server market share gains accelerate as Milan ramps in Q4. Moreover, we believe these products are relatively immune if the macro weakens,” said Richard.

Milan is the code name for Advanced Micro Devices’ third-generation EPYC processors. The rollout of this line of processors is expected to take place later this year.

Milan could be a game changer as it will be one of the most powerful and flexible CPU’s on the market. “Milan’s performance will demonstrate how far ahead AMD is in terms of performance in the server market,” Richard predicts.

On Top of Its Game

An interesting outcome of the Covid-19 pandemic is the surge of gaming activity. With so many people stuck at home and unemployment spiking, gaming has helped many people to relieve the boredom and tension.

As a result, it’s reasonable to expect gaming consoles to continue to be in high demand. These consoles are generally popular items during the holiday season, but the gaming apparatus demand could be particularly strong this year.

For AMD stockholders, this presents an opportunity for a long-awaited breakout. Richard expects revenue from game consoles to exceed $1 billion in calendar-year 2020, and that’s a conservative estimate.

For Advanced Micro Devices, a short supply and a high demand for gaming consoles should drive strong revenue in the run-up to the holiday season. To capture the upside, investors should own the shares before the holiday season commences. Otherwise, you could miss out on the best part of the price move.

Moreover, two well-known gaming-console manufacturers intend to use Advanced Micro Devices’ processors this year. Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT) have extremely popular consoles and they’re both planning to roll out next-generation models this year.

Specifically, Sony’s PlayStation 5 will incorporate the 8-core AMD Ryzen Zen 2 for its CPU, along with a custom 7nm AMD Radeon RDNA 2 as its GPU. Meanwhile, Microsoft’s Xbox Series X will use similar components from Advanced Micro Devices but with different specifications.

The Final Word on AMD Stock

As you can see, there are specific and compelling catalysts in store for AMD stockholders. Even though the shares have been stuck in a range, Advanced Micro Devices will remind investors in the back half of 2020 that it’s still a force to be reckoned with in the semiconductor market.

Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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