Advanced Micro Devices (NASDAQ:AMD) stock has been on fire in 2020 as it steadily gains market share against its two primary rivals in the ultra-competitive semiconductor space.
But AMD is also a solid stock in the era of the novel coronavirus, and its efforts to aid researchers’ search for a Covid-19 cure. All of this makes AMD stock an even more enticing pick today.
There’s no doubt about it — this A-rated stock is making all the right moves these days.
AMD Stock and Covid-19
Advanced Micro Devices announced a deal in June with Penguin Computing to supply supercomputers to three U.S. universities to support researchers’ efforts to find a vaccine for Covid-19.
Penguin, which is a division of Smart Global Holdings (NASDAQ:SGH), is providing computers supplied by AMD’s second-generation EPYC processers and Radeon Instinct M150 GPUs. The units are going to New York University, the Massachusetts Institute of Technolog and Rice University.
The effort is part of AMD’s Covid-19 HPC fund that launched in April. Its $15 million fund also includes a commitment to supply hundreds of Radeon Instinct M150 GPUs for the Department of Energy’s Corona supercomputer.
Why is it important?
Without massive computing power, scientists and researchers have virtually no shot at finding a Covid-19 vaccine any time over the next year. Even with supercomputers and the best technology that AMD and other semiconductor companies have, it will be a huge challenge to bring a vaccine to market in 2020.
AMD president and CEO Lisa Su spoke to the issue when the announcement was made.
“High performance computing technology plays a critical role in modern viral research, deepening our understanding of how specific viruses work and ultimately accelerating the development of potential therapeutics and vaccines … AMD and our technology partners are proud to provide researchers around the world with these new systems that will increase the computing capability available to fight COVID-19 and support future medical research.”
Growing Market Share
AMD wouldn’t be a great semiconductor stock if it wasn’t already gaining market share against rivals Intel (NASDAQ:INTC) and Nvidia (NASDAQ:NVDA) in two critical markets — central processing units and graphics processing units.
In the CPU market, Intel is the primary competitor. AMD has made plenty of headway in the desktop market thanks to its line of Ryzen processors. It now has 46.9% percent of the market, as of the second quarter of this year. That’s a huge increase from the company’s 23.4% market share just three years ago.
As far as the GPU market goes, Advanced Micro Devices’ major competitor is Nvidia. AMD has demonstrated significant market share growth in this space since 2018 grew, which is a promising development.
It’s also notable that AMD’s chips will play a big role for gamers in the fourth quarter and into 2021. The company will power next-generation consoles, Microsoft’s (NASDAQ:MSFT) Xbox Series X and Sony’s (NYSE:SNE) PlayStation 5, both of which are scheduled to debut before Christmas.
All this trends positive for AMD stock, which was mired at around $2 per share just five years ago. Today, AMD is at more than $50, and has climbed 18% so far in 2020.
RBC Capital Markets set price target of $66 for AMD stock on June 17 and reiterated its outperform rating.
The Bottom Line for AMD
Advanced Micro Devices has a bright future in the semiconductor space, which is one of the reasons I’ve identified it as one of the best semiconductor stocks on the market right now.
And you can’t ignore the company’s ambitious vision for the future and the smart way it’s positioning itself for an extended culture of teleworking.
AMD stock has an ‘A’ rating in my Portfolio Grader, where it’s listed as a strong buy.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.