It’s Not as Bad as It Looks for Advanced Micro Devices Stock

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AMD stock - It’s Not as Bad as It Looks for Advanced Micro Devices Stock

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Advanced Micro Devices, Inc. (NASDAQ:AMD) has had a rough year. Between worries about a trade war with China and volatility within the bitcoin industry, AMD stock has shed nearly a third of its value this year.

While both of those issues definitely warrant concern about the firm’s valuation, at just $10 per share, now could be a good time to add AMD to your portfolio.

The Trade War

One of the big reasons AMD stock has been on the decline is talk of a trade war between China and the U.S. While this has had negative implications for the majority of the market, Advance Micro Devices was hit harder than most because the company’s long-term growth story is closely tied to China (Editor’s Note: Source is behind a paywall).

AMD has brokered several data-center deals with Chinese tech companies. But if harsh new tariffs on U.S. goods are imposed, it’s likely that many of those deals will fall apart.

So I’d say you can’t ignore the threat of trade-related tension between the U.S. and China when it comes to AMD stock.

However, it’s also important to consider that a full-blown trade war is unlikely to materialize either. It’s in both countries’ best interest to sit down and come to an agreement — something both sides are well aware of. Right now, the harsh rhetoric has traders jumpy. But the most likely outcome is a calm negotiation between the two nations. This won’t have the far-reaching consequences that sensationalized headlines would have you believe.

The Bitcoin Blunder

Another big reason for AMD stock’s losses was the sharp decline of crytpocurrencies — namely bitcoin. AMD got a lot of attention last year when the firm’s processors emerged as bitcoin miners’ preferred choice. As cryptocurrencies were being built up as a huge investment opportunity already, AMD stock went along for the ride as a way to play the trend.

It’s certainly true that AMD had a stake in the cryptocurrency space. The firm’s chips were by far the most popular among miners, and growth in the industry was expected to create a major tailwind for the company.

However, not all of AMD’s growth was coming from cryptocurrency-related opportunities. In fact, the company said that only a small percentage of AMD’s overall revenue came from blockchain. With that in mind, the stock’s rapid decline looks like it might be overdone.

Where to Go From Here

The problems mentioned above shouldn’t be completely disregarded. AMD is facing some tough headwinds in the year ahead. However, at just $10 per share, it looks like there’s an opportunity to make some money if the company continues to deliver growth despite the bears’ pessimism.

For one, AMD is due to release its highly anticipated second generation Ryzen CPU this week. The new chip is expected deliver impressive processing speeds that will to put AMD on par with competitors like Intel Corporation (NASDAQ:INTC).

Beyond that AMD has been building out its GPU offerings as well, leading the firm to become a much stronger competitor against the likes of Nvidia Corporation (NASDAQ:NVDA).

While some of the company’s markets are looking shaky, others — like Virtual Reality and gaming — are experiencing rapid growth. This should continue to support strong earnings growth in the year ahead. No matter what happens to cryptocurrencies.

The Bottom Line for AMD Stock

AMD stock is likely to make its way back toward the $15 per share mark in the coming year, making $10 a great entry point.

The losses AMD has suffered so far have been largely the result of overdone fears and wider market issues. While AMD may not be top of the class in the semiconductor market, the company has a lot of room for growth and the share price isn’t likely to languish near $10 for long.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities. 

Marie Brodbeck has a Finance degree from Duquesne University and has been a financial journalist for more than a decade. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.


Article printed from InvestorPlace Media, https://investorplace.com/2018/04/its-not-as-bad-as-it-looks-for-advanced-micro-devices-stock/.

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