Why Advanced Micro Devices Stock Has Still Powered Higher in 2020


The record setting stock market selloff that took place in March had a huge impact on most stocks. Advanced Micro Devices (NASDAQ:AMD) was no exception. On March 16, AMD stock closed at $38.71, a loss of 34% from the all-time high it had hit just one month earlier. However, AMD is not just recovering faster than most, the company’s stock is once again within striking distance of those record highs. AMD closed at $55.92 on Wednesday, a 5.7% pop.

Why AMD Stock Has Still Managed to Power Higher in 2020

Source: Sundry Photography / Shutterstock.com

This brings us to some key questions. For example, why are Advanced Micro Devices shares performing so strongly when other stocks continue to struggle? Is there an end in sight to this growth, or is it too late to get onboard the AMD train?

With that in mind, let’s take a deeper look into AMD stock now.

Continuing on From a Stellar 2019

To put it mildly, Advanced Micro Devices had a great year in 2019. The company made big gains against Intel (NASDAQ:INTC) on the PC front. New Ryzen desktop and mobile processors continued to win accolades and more importantly, to steal marketshare from Intel. AMD’s Epyc processors continued to make headway in the lucrative data center market. The company didn’t miss an opportunity to give Nvidia (NASDAQ:NVDA) a run in the market for graphics cards.

Given all the wins the company was notching, it was no surprise that AMD stock was one of the top performers for 2019. It gained 157% on the year. 

With momentum on its side — and being the processor supplier for a new generation of video game consoles due to launch this fall — AMD continued that performance in 2020. Before the coronavirus triggered a market selloff, AMD stock had posted a 28% gain so far this year.

AMD Announces New Budget Ryzen Desktop Processors

The pop that AMD saw on Wednesday was a market response to the news of the company’s new Ryzen 3 3100 and the Ryzen 3 3300X processors. 

These new budget desktop offerings will take on Intel’s forthcoming Comet Lake Core i3 lineup, offering quad-core, eight-thread performance starting at just $99. The chips are expected to show up shortly in budget gaming PCs. They should take the wind out of Intel’s sails when it finally launches its new Core i3 processors, including adding pricing pressure.

What to Expect from AMD’s Q1 Earnings Report

AMD reports its first-quarter earnings after the bell closes on April 28. In its guidance for Q1, AMD projected revenue of $1.8 billion (plus or minus $50 million), which would represent a 42% year-over-year gain. The company also projected full-year revenue growth of 28% to 30% for 2020.

Last year, the company delivered earnings-per-share of 3 cents for the quarter. This year, analysts are looking for EPS of 14 cents.

The company published an update on March 5, downplaying the potential impact of the novel coronavirus pandemic on its Q1 and 2020 financials:

“AMD expects the impact from COVID-19 in the first quarter to be modest, potentially resulting in revenue coming in at the lower end of the guidance of approximately $1.8 billion, plus or minus $50 million. Full year 2020 financial guidance remains unchanged.”

Bottom Line on AMD Stock

Advanced Micro Devices has seen a flurry of analyst upgrades through 2020, including several big ones in March that helped accelerate AMD’s recovery. InvestorPlace contributor Ian Cooper writes that these include notable upgrades from Piper Jaffray and Northland Securities.  

However, at $55.92, AMD stock is already pushing past those price targets. That raises the question of how much upside remains. Ian’s analysis suggests it could hit $65 in the near term, and “could easily rocket higher with sizable catalysts.” One such catalyst arrived on Wednesday with the announcement of the Ryzen 3 3100 processors. AMD is going to have plenty of other releases to announce this year.

That won’t be good news for competitors Intel or Nvidia, but these future catalysts just might be the AMD upside investors are hoping for. 

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2020/04/advanced-micro-devices-amd-stock-powered-higher/.

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