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The Coronavirus Can’t Limit AMD’s Long-Term Growth Potential

Catalysts that pushed AMD stock higher over the years are still relevant

It’s been a rough week for the stock market and investors are feeling the effects. The Dow Jones plunged over 2,300 points on Thursday due to fears over an economic slowdown due to the coronavirus outbreak. Naturally, this has impacted popular names like Advanced Micro Devices (NASDAQ:AMD). Heading into the Friday session, AMD stock was down nearly 15%.

The Coronavirus Can't Limit AMD's Long-Term Growth Potential
Source: Hand Robot/Shutterstock.com

Overall, the markets experienced more activity (both positive and negative) over the past week than they did during all of 2019.

As concerns about a recession continue to mount, it’s left many people wondering if now is the time to invest at all. In particular, cruise line and airline stocks have been hit especially hard in the past month.

Every investor needs to know their own level of risk tolerance and what they’re able to stomach, but certain stocks are less vulnerable to coronavirus concerns than others. In particular, Advanced Micro is a good option for anyone that wants a solid long-term buy.

Here are four reasons why AMD stock is a clear discount for patient investors.

1. Significant Growth in the GPU Market

AMD’s computing and graphics business make up about 70% of its total revenue. And this is good news considering the company has seen significant momentum in the GPU market in recent years.

During the fourth quarter of 2019, AMD reached 31% of the total GPU market share. This is up from 18% a year earlier. This was largely thanks to the company launching a new line of GPU’s midway through the year.

2. AMD’s Financial Projections Are Encouraging

Last week, AMD held its annual Financial Analyst Day event where the company shared updates on its long-term financial projections. And the updates company management shared was encouraging.

By 2023, the company expects its annual revenue to grow by 20% and its gross margins to exceed 50%. And AMD expects its operating income to reach $3.75 billion, which represents 25% operating margins.

3. Solid Company Leadership

Positive financial projections are a dime a dozen from companies, but it can be hard to know whether or not to take these claims seriously. The difference is that AMD has shown that it’s able to deliver on its promises. And that is largely thanks to the leadership of CEO Lisa Su.

Su pulled the company out of significant financial distress and made it a viable player in the chip industry. So, investors can be confident in the company’s potential with her at the helm.

4. Long-Term Growth Opportunity

In spite of the company’s recent momentum, AMD is still a much smaller player when compared to companies like Intel (NASDAQ:INTC). However, that means AMD stock still has much more room to grow in the coming years.

The market may be panicking right now, and the U.S. may experience an economic slowdown in the coming year. But this is unlikely to derail the long-term growth potential of AMD stock.

Jamie Johnson is a personal finance freelance writer and has been writing for InvestorPlace since mid-2019. She writes for a number of other well-known financial sites, including Credit Karma, Quicken Loans and Bankrate. As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/03/amd-stock-growth-potential/.

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