Advanced Micro Devices, Inc. (AMD) Stock Is Set for a BIG Breakout

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Even though Advanced Micro Devices, Inc. (NASDAQ:AMD) has been showing tremendous progress this year, there hasn’t been an out-sized impact on the stock price. This is certainly the case in comparison to one of its main rivals, Nvidia Corporation (NASDAQ:NVDA), whose shares are up 86%.

AMD Stock

But next Tuesday, we should get a better sense of the AMD stock price, as the company will report its third quarter results. The Street is looking for revenues to hit $1.51 billion, up 15.3%, and for earnings to come in at eight cents a share.

Yet AMD earnings could be poised for a beat. Why? Well, for the most part, the company has been launching a variety of solid products, all of which are targeting massive market opportunities. After all, with the exploding growth in data, such as from cloud computing, mobile, social networking and AR/VR, there is a need for powerful chips. The good news for AMD is that the company has a long history with Graphics Processing Units (GPUs), which have proven to be quite effective with this megatrend.

For example, the company’s Radeon Vega GPU has been getting lots of traction with PC gaming and professional design systems. Keep in mind that this chip is a part of Apple Inc.’s (NASDAQ:AAPL) iMac Pro. In fact, here’s how the company described it in a press release:

“Radeon Pro 500 series graphics enable extraordinary computing experiences, including stunning gaming, immersive VR on select models, and fluid content creation with exceptional performance and support for GPU acceleration across a range of creative applications on the Mac platform, such as Adobe Premiere Pro, After Effects, and Photoshop and the Foundry Nuke, Mari and Modo.”

But of course, AMD is more than just GPUs. Note that the company also has been developing cutting-edge CPUs under the Ryzen brand. True, the market is mature. But AMD should be able to expand its share because of the low-cost strategy.

Although, when it comes to AMD stock, the big driver is likely to be the Epyc chip, which is targeted at the enormous data center market. The fact is that customers want an alternative to Intel Corporation (NASDAQ:INTC), and yes, AMD has been delivering.

Here’s how InvestorPlace.com’s Emerson puts it: “With EPYC, AMD is creating a simplified machine intelligence architecture that offers flexible configurations and optimized platforms. Single socket versus the current status quo of dual socket (80% of the server market) with eight more total cores than Intel Corporation’s E5-2650 V4.”

Even though the EPYC is still in the early days, AMD has been able to snag many top-notch customers like Hewlett Packard Enterprise Co (NYSE:HPE), Dell, Microsoft Corporation (NASDAQ:MSFT) and Baidu Inc (ADR) (NASDAQ:BIDU).

Oh, and yes there is the wild card: cryptocurrencies. AMD’s chips have the necessary processing power to mine this digital gold.

But isn’t this market a bubble? Perhaps. But bubbles can last a long time.

Bottom Line on AMD Stock

Now AMD’s progress on generating revenues has been a disappointment, which is a big reason that the shares have had a muted performance. Besides, AMD must deal with tough competitors like INTC and NVDA as well as have to manage through long sales cycles.

Despite all this, the company has been able to innovate and launch a variety of standout products. This certainly is impressive given that AMD is a relatively small company within its industry.

So then for investors, there needs to be some patience. For the most part, turnarounds are usually choppy, so taking a long-term approach on AMD is probably the best option.

Tom Taulli runs the InvestorPlace blog IPO Playbook and is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short SellingFollow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.


Article printed from InvestorPlace Media, https://investorplace.com/2017/10/amd-stock-set-breakout/.

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