There isn’t a clear narrative when it comes to Advanced Micro Devices (NASDAQ:AMD) stock. The company’s shares are up 62% in 2019 but still down nearly 10% from a year earlier. Investors have become increasingly negative about the company in recent months due to several ongoing headwinds.
But analysts are pretty evenly split when it comes to the AMD stock price. Most consider the stock a moderate buy and the average price target is $33.17, which gives it an upside of more than 15%.
So is the stock a buy, or should you hold off until there’s a little more momentum? Here are a few things you need to know about AMD stock.
AMD Stock Continues to Take Market Share From Intel
Of course, an article about AMD wouldn’t be complete without mentioning Intel (NASDAQ:INTC). Intel has outperformed AMD for a long time but in recent years, AMD has slowly begun chipping away at Intel’s lead in the CPU market.
Advanced Micro Devices has released several new products this year, including a high-end graphics card and its third-generation Ryzen CPUs. This has given it an edge over Intel in terms of technology.
And one report found that AMD doubled its market share in the CPU market over the past three years. The company could have performed even better had it not been held back by the ongoing trade war.
AMD Has an Advantage in the Gaming Industry
Another market where AMD has a slight edge is in the gaming industry. As of January 2019, there were more than 91 million PS4s sold and more than 40 million Xboxes sold.
Both Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) have stated that their next-generation consoles will use AMD CPUs and GPUs. This means there’s a lot of potential for future cash flow for AMD. The Sony PS4 is expected to be released in 2020.
AMD Stock Price Doesn’t Reflect Its Potential
Advanced Micro Devices stock has been up and down over the past few months, due to declining revenue and trade war concerns. Most recently, it fell due to fears over a 7 nm supply shortage.
This has led to mixed reactions from Wall Street. Out of the 22 analysts reviewing the company, 13 recommend holding the stock, eight give it a ‘buy’ rating, and one outlier recommends selling. But there are still a lot of opportunities available to AMD in the coming years.
The company has seen a lot of growth in its data center unit and has landed a number of high-profile customers including Microsoft, Dell (NYSE:DELL), and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). And while its gaming business has slowed over the past year, this should pick up once Sony and Microsoft release their updated gaming consoles.
All in all, AMD stock is undervalued and may be a good investment opportunity going forward.
As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.
