Advanced Micro Devices (NASDAQ:AMD) has made huge gains in the past five years. The company’s revenue increased by more than 20% over the past two consecutive years.
AMD stock is up more than 80% year-to-date. And last year, AMD was the best-performing stock in the S&P 500.
Shares of AMD continues to perform well, largely thanks to a variety of innovative product launches. The company continues to produce great products even though its main competitor, Intel (NASDAQ:INTC), massively outspends the company when it comes to research and development.
Reasons to Invest in AMD Stock
Advanced Micro Devices has made a number of strategic moves which continue to fuel its growth. Here are three reasons why AMD stock is a good buy in 2019.
Innovative New Products: AMD’s rival Intel has experienced repeated delays as it attempts to introduce its newest server chip, which is set to be released in 2021. AMD has capitalized on these delays and increased sales of its EPYC processor. What’s more, the company is forging ahead with its plans to release new 7-nanometer chips. This technology will be available in a wide range of products, from server processors to graphics gaming cards. The new chip will be smaller, more efficient, and deliver faster processing speeds. According to AMD’s CEO Lisa Su, the company’s goal is to surpass the 25% share of the server market that AMD had in 2006.
Making Headway in the Gaming Industry: The gaming industry is estimated to hit $174 billion by 2021. And AMD continues to position itself to be a major competitor in the cloud, PC and console gaming industry. The company introduced a variety of products for gamers with its Radeon graphics card and third generation Ryzen processor. And the company recently introduced the newest Xbox Game Pass on PC, which gives players access to more than 100 PC games for three months when they purchase select AMD products.
Strong Partnerships With Other Companies: Over the years, AMD has formed strategic partnerships with companies like Microsoft, Amazon and Google’s parent company Alphabet. The company has a long-running partnership with Microsoft and the company recently announced it plans to use AMD’s semi-custom chips to power its next-generation Xbox gaming console. Amazon uses the company’s cloud server chips and Google chose AMD’s Vega graphics for its new Stadia streaming service. Most recently, AMD announced it was forming an IP licensing agreement with Samsung. AMD will give Samsung access to its RDNA architecture.
Expect AMD’s Momentum to Continue
Of course, the semiconductor industry does tend to be more turbulent than most. And it’s more competitive now than ever, with companies like Intel, Nvidia and many others competing to launch the next big product.
And most recently, shares of AMD fell more than 3% after the U.S. Commerce Department banned five more Chinese companies from buying U.S. products. Overall, many analysts are divided on whether AMD is a good investment or not.
But the company has many factors working in its favor. AMD’s 7-nanometer chips should position the company to be more competitive with Intel in the coming year. And the stock has shown it can bounce back from these periodic downturns. All in all, AMD could be a good long-term buying opportunity.
As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.
