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Advanced Micro Devices (AMD) stock soars to record high on bullish outlook

Shares of Advanced Micro Devices, Inc. (NASDAQ: AMD) soared to a record high of $57.64 on Tuesday amid hopes of a promising future, backed by 5G, artificial intelligence, and Internet of Things. Also, the company continues to gain in its race with chipmaker Intel Corp. (NASDAQ: INTC).

The blockchain technology, which is a decentralized digital ledger used to securely store, transmit and process sensitive and valuable data, is the next major ‘graphics compute’ for the company. Blockchain applications are typically performed using application-specific integrated circuits or a general-purpose CPU or GPU.

AMD Ryzen
Courtesy: Christian Wiediger on Unsplash

AMD has used a collaborative co-development approach with many of the leading game console manufacturers. It can address customer needs in many other areas beyond game consoles. The company’s top customer Sony Interactive Entertainment LLC accounted for more than 10% of net revenue in 2019, for products from its Enterprise, Embedded and Semi-Custom segment.

Intel has been struggling to maintain the sales momentum amid the continuing slowdown in the PC market. AMD’s unit sales and average selling prices could be impacted by Intel’s dominant position in the microprocessor market and integrated graphics chipset market. Also, Intel is developing its own high-end discrete GPUs. Its aggressive marketing and pricing strategy could hurt AMD in the future.

The company has been cautious in its guidance for the first quarter and full-year 2020, which is slightly below analysts’ consensus estimates. This is due to competition and the production of its 7-nanometer product. AMD is presently focusing on a 7-nanometer product portfolio, which is manufactured by Taiwan Semiconductor.

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For the fourth quarter, Advanced Micro Devices reported a 347% jump in earnings as the computing and graphics segment drove total revenues higher by 50%. The strong sales of Ryzen processors and Radeon gaming graphics processing units pushed up the computing and graphics revenue by 69%.

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Shares of AMD have risen over 141% in the past year. Market experts believe that the trend is likely to continue in the future. An improved product portfolio, faster growth, higher returns, and increasing market share are the reasons behind the uptrend. This has been at the expense of Intel.

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