Is Advanced Micro Devices, Inc. (NASDAQ: AMD) Likely To Outperform This Year?

February 12, 2018, 09:25 am ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Advanced Micro Devices, Inc. (NASDAQ: AMD) is a niche player in the semiconductor manufacturing industry where it faces stiff competition from other major companies in the sector. The company outperformed in 2016 where its stock price rocketed higher as investors expected stellar future performance. However, the company struggled to attain profitability in 2017, which also negatively affected its stock price.

Article Summary

AMD stock performed poorly in 2017 despite its improving topline.

The company faces stiff competition from both Intel and NVidia.

The company has several growth opportunities this year.

Here’s the trading report on AMD.

AMD faces stiff competition from Intel Corporation (NASDAQ: INTC) in the manufacture of PC chips where it is highly unlikely that the company could overtake Intel in the near future. The company also plays second fiddle to NVIDIA Corporation (NASDAQ: NVDA) in the production of graphics processing units (GPUs) mainly used for gaming and cryptocurrency mining.  

The company is a much smaller competitor to its two larger rivals, which means that it has more growth opportunity especially now that Intel is currently dealing with the Meltdown and Spectre vulnerabilities in its chips. Although AMD was also affected by the Spectre vulnerability, the company has fewer chips in circulation, which technically makes it easier for AMD to dispatch software patches to fix the vulnerabilities.

Opinion among analysts is split regarding AMD’s performance this year with some analysts rating the stock a strong buy, while others rating it a sell and a small group rating the company as a hold. Intel stock has fallen this year due to the bugs highlighted above, while AMD stock is up about 20% since the beginning of the year.

The company seems to have shifted its focus to the booming graphics market given that it recently appointed two new senior Vice Presidents Mike Rayfield and David Wang to head its Radeon Technologies Group. The company’s GPU business is currently booming due to the demand arising from the cryptocurrency mining field, but some analysts believe that this boom is unsustainable as cryptocurrencies might be in a bubble.

Finally, it is not enough to know that a stock is likely to head higher, or lower this year. As an investor or trader, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.

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