Advanced Micro Devices, Inc. (NASDAQ: AMD) Ryzen Chips To Fuel Growth In 2018

January 10, 2018, 15:11 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Advanced Micro Devices, Inc. (NASDAQ: AMD) released its Ryzen microprocessors in late 2017, which to the surprise of many industry analysts and tech professionals almost outperformed similar spec’d Intel Corporation (NASDAQ: INTC) microprocessors.  For the first time in many years, AMD had developed a family of chips targeted at the x86 desktop PC market that could compete with the more popular Intel chips in terms of performance.

Article Summary

AMD recently launched its Ryzen chips, which compete with Intel chips on performance.

The company grew its revenues boosted by the popularity of the new chips.

The company is set to launch new Ryzen refresh chips in Q1 2018.

Here’s the trading report on AMD.

The immense success of the first generation of AMD Ryzen chips threatened Intel’s dominance in this market, which led Intel to release a set of microprocessors that could compete directly with the Ryzen chips. Intel launched its 8^th generation chips earlier this year where it increased the number of cores on the chips in order to prevent AMD from stealing more market share from the company.

AMD is set to release a new refresh lineup of Ryzen chips in Q1 2018 that are likely to perform even better than the earlier versions and are likely to challenge Intel for more market share in 2018. The new Ryzen refresh microprocessors are likely to challenge Intel’s current microprocessors by reducing the performance difference between similarly spec’d chips to the low single digit percentages.

In the past, AMD was forced to compete with Intel on a price basis by lowering the prices of its chips in order to gain acceptance in the market. However, the Ryzen microprocessors are the first CPUs that have allowed AMD chips to compete with Intel chips on a performance basis.

The company is also competing effectively with NVIDIA Corporation (NASDAQ: NVDA) in the Graphics Processing Units market as its chips are finally gaining acceptance in the cryptocurrency mining industry. AMD GPUs are gaining popularity in the mining of cryptocurrencies such as Ethereum despite the fact that NVidia is the undisputed leader in this growing market.

AMD has constantly surprised analysts in the past year as was the case with its Q3 earnings results where the company reported net earnings of $71 million. I expect the company to continue beating analysts’ expectations by growing its revenues boosted by the popularity of its Ryzen line of products in 2018.

The company should also work on reducing its debt burden, which ballooned to $550 million this year, from a low of $180 million in the past. However, the company should be able to service its debt comfortably even with its current revenues.

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