Thankfully for Advanced Micro Devices (NASDAQ:AMD) investors, the impact of the novel coronavirus did not slow its momentum. In fact, in 2020, AMD stock saw a near-90% return. That’s nothing short of marvelous. But will this success continue in 2021?
The stock hit a new high of $97.98 last month and it seems like there is still no stopping it. There are several key reasons why the stock should stay on your radar.
For example, AMD has strong financials backed by significant delivery numbers. There is a significant rise in the number of CPUs it delivered in 2020 compared to last year. And as the work-from-home trend continues, demand for CPUs will continue to grow. The company is also growing with rising demand from the cryptocurrency industry.
Let’s take a closer look at some of these catalysts to determine what investors should expect from AMD stock in 2021.
An Extensive Line Up of Products
At the CES 2021 technology trade show, the company announced the World’s Best Mobile Processors. Laptops with Ryzen 5000 Series Mobile processors will be available in Q1 2021. The AMD Ryzen PRO 5000 series mobile processors deliver high-grade security and quick manageability to commercial users. These new chips use the same 7nm manufacturing process. The company expects a portfolio of more than 150 commercial and consumer notebooks based on the Mobile Processors. For games, there is the HX Series processors that provide gamers with strong performance and HS processors for H-series in lighter and thinner form factors.
Developments to Ryzen processors should be on any AMD stock investor’s mind, as the market for Ryzen CPUs is heating up. For example, there were chip shortages at the end of the year with Microsoft (NASDAQ:MSFT) requesting AMD to increase production to satiate rising demand for its Xbox Series X and Series S consoles, both of which use AMD chips.
Another potential indicator of the great success ahead for AMD is its recent price-hike for the latest generation of Ryzen 9 products.
The Ryzen 9 3600X, 3800X and Ryzen 3900X sold like hotcakes and were largely affordable options. This time, however, AMD advantaged its superior performance over Intel’s (NASDAQ:INTC) products by increasing the cost of the Ryzen 9 5600X and 5900X by 50% and 10%, respectively, compared to the cost of the 3600X and 3900X. And this hasn’t hampered sales.
In fact, the company has already reached an all-time high in terms of sales in December 2020. The company hit the 40,000 units mark — a 14% increase from the 35,000 units sold in November. According to TechRadar, AMD’s bestselling chips — Ryzen 5000 models and Ryzen 3000 processors — account for more than 50% of the CPUs sold in December. And the Ryzen 9 5900X is currently the “best CPU” for gaming.
The company’s strength in the CPU market isn’t the only reason the hype will continue in 2021. Another reason to get bullish about AMD stock is a recent deal with Samsung (OTCMKTS:SSNLF). Samsung confirmed that it will work with AMD on a custom mobile GPU. Both companies have been working together for two years, but Samsung revealed more about it at the Exynos On 2021 event. The chips will be used for its next flagship product, but the company did not talk more about the type of product. Samsung is moving away from the custom CPU core for the Exynos chips and it threw light on a powerful GPU that might be in progress.
The Bottom Line on AMD Stock
The company is clearly a strong player in the CPU market and that should remain true throughout 2021 as the overwhelming demand for its CPUs continues and it introduces new technologies to the market.
But there’s yet another strong reason AMD stock should remain strong: The recent CEO transition in Intel. Specifically, Pat Gelsinger will replace CEO Bob Swan in February. AMD is already scooping plenty of market share from Intel. The challenges presented by Intel’s CEO transition should help AMD to continue to overpower its rival.
When you put all of these points together, you really do not need to worry much about the long-term prospects for AMD. That’s part of what makes it a perfect growth stock. The company is healthy and efficiently run with strong financials. AMD stock has been a powerhouse over the past few years, but there’s no real reason to expect that strength to end anytime soon.
That makes it a solid addition to any investor’s portfolio, and the recent dip a promising buying opportunity.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.
