Over the last four years, Advanced Micro Devices (NASDAQ:AMD) has been one of the most explosive stocks on the market. In that time, AMD stock has risen from just above $2 to $51, outperforming markets and major competitors.
It was even the top S&P 500 stock of 2019, all as it chipped away at Intel’s (NASDAQ:INTC) market dominance.
Year-over-year, shares of AMD are now up 158%, as compared to Intel’s gain of just 44%. Furthermore, AMD even outperformed the iShares PHLX Semiconductor ETF (NASDAQ:SOXX), which is up 64% YOY, as well.
The first time I weighed in on AMD stock, it traded at $28.90. With it now up to $51 per share, I’m still very bullish with sights set on $70 this year. All as the company continues to chip away at market share from some of the biggest names in the sector, including Intel and NVIDIA (NASDAQ:NVDA).
AMD Is Crushing Its Competition
AMD could have another explosive year, especially as it gains market share from Intel.
At the moment, Intel has yet to fully ease its processor shortages, which is causing notebook vendors to look to more of its competitions in 2020.
Furthermore, AMD may also challenge NVDA dominance in 2020, as well with its “NVIDIA Killer.”
The company is reportedly developing an advanced high-performance graphics card to challenge NVDA in the high-end GPU market. AMD’s expanding GPU portfolio serving every price point is a threat to NVIDIA’s dominance.
According third-quarter 2019 JPR data, “AMD’s market share in discrete GPU shipments came in at 27.08%, up from 25.72% in third-quarter 2018. NVIDIA’s market share declined to 72.92% from 74.28% in the same period,” as highlighted by Zacks Equity Research.
Additionally, another big story for AMD in 2020 are new gaming consoles.
New 2020 gaming consoles from Microsoft (NASDAQ:MSFT) and Sony Corporation (NYSE:SNE) due to be launched this year use AMD chips. That alone offers AMD a powerful catalyst.
Analysts Still Love the Stock
While nervous on valuation, Cowen analyst Matthew Ramsay reiterated his “outperform” rating on the stock by raising his price target from $47 to $60.
“With shares up 65% since our last preview, we are increasingly both confident (in fundamentals) and nervous (on valuation),” he wrote. “AMD has now showcased a track record of consistent roadmap execution and stability while offering premier technological specs and TCO [total cost of ownership] to customers seeking a viable x86 alternative to Intel.”
The analyst also said AMD could generate strong growth with laptops in the future. Also, he added that notebook chip sales will rise to $2.15 billion by 2021 from $1.45 billion in 2019.
Additonally, Deutsche Bank analyst Ross Seymore has a “hold” rating on AMD, but raised the price target on AMD from $29 to $40. “We fully expect AMD’s strong product/strategic execution to continue in 2020 and 2021,” he wrote.
Furthermore, Wells Fargo analyst Aaron Rakers also increased his price target to $40 to $48 on gains in the server market.
“We continue to see AMD’s wins in [High Performance Computing] / supercomputing as increasing validation of the company’s strong competitive positioning in datacenter CPUs…thus remaining supportive of our positive upside thesis,” he wrote.
The Bottom Line on AMD Stock
With sufficient growth and ability to reduce competitors’ market share, there’s plenty to like about AMD stock in 2020.
While valuation is concerning, I still strongly believe AMD could rally to $70 per share. We’ll know more about that potential when the company posts earnings on Jan. 28 after the closing bell, but for now, AMD is a stock to buy.
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
