Advanced Micro Devices (NASDAQ:AMD) has been quietly making a comeback with AMD stock up more than 10% over the last 30 days.
Semiconductors finished the week up a couple of percentage points ahead of the G20 meeting and with generally positive comments surrounding the meeting, a number of categories have been rallying including Chinese equities and semiconductors.
AMD stock has seen impressive performance YTD, up 80 percent. Even though this is off the highs earlier in the month, these are still undeniably great results. AMD has notably outperformed fellow semiconductor competitor NVIDIA (NASDAQ:NVDA). NVDA shares are up just 28 percent for the year. Extend that time horizon to the past year and AMD’s lead widens considerably: 103 percent to NVDA’s 33 percent loss.
As the narrative of a second-half recovery for the industry gains momentum, expect AMD stock to continue to outperform the broader market and peers alike.
AMD Stock Is Best in Class
Part of why AMD stock is so compelling is that the company continues to make huge innovative strides across product lines. This innovation is such that major incumbents, namely Intel (NASDAQ:INTC), have seen their previous dominance seriously contested.
Recently Forbes detailed testing of processor performance leading up the official disclosure of AMD’s 3rd Generation Ryzen ‘Zen 2.’ The research indicates that AMD’s Ryzen 7 3700X chip is not only comparable to but also beats Intel’s Core i9-9900K processor performance on a number of key tests.
Additional tests have revealed that Intel’s CPU still has the lead per arithmetic and floating point performance of processors but that lead has shrunk to less than 8 percent. Strides in image processing have been a huge success for AMD as well, now with that score showing a 15 percent lead over the Intel CPU.
It’s clear that there the possibility of the dawn of a new era with AMD as the shining leader. The company is at the forefront of a shift in the “chip landscape,” and it’s likely that their momentum continues.
The Big Picture for AMD Stock
With all the focus on the technical aspects of the chip business, it’s also important to occasionally step back and take a macro assessment. This includes evaluating the total addressable market for the company’s products i.e., quantify how much runway the company has.
AMD stock’s runway is massive. The Personal Computer space represents a $30 billion market. Immersive is $15 billion. Data centers is $29 billion, which frankly may be conservative given the rate of growth in cloud computing and the demand for data storage.
What becomes apparent is that AMD is building the best processors in the world for both desktops and laptops. Their product lineup for 2019 is impressive. They are continuing to roll out faster, better chips, which is what the market likes to see. This year alone AMD expects a 30 percent increase in Ryzen systems and 50 percent more laptops. They are well on their way to deliver despite a soft first quarter and some prevailing China concerns.
The Bottom Line on AMD Stock
AMD is ascendant. It is becoming a leader with a devout following. NVIDIA has not been able to deliver in the same way as AMD and INTL is finding that its heels are being nipped and then some, by AMD. Across PC’s, workstations, servers, mining farms, etc. AMD is making its mark.
I expect AMD to continue gaining market share is in the second half of the year and create new yearly highs.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.
