Advanced Micro Devices (NASDAQ:AMD) Stock Outperforms: What to do Now?

Among the major players in the microchip industry, Advanced Micro Devices, Inc. (NASDAQ:AMD) seemed to be a laggard up until 2017, but things have changed steadily over the years. It was reflected in the performance of the company’s stock over the course of the past year as well.

Key Triggers

Over the course of the past year, the stock has delivered returns of as much as 100%, and it is important for investors to take a closer look at how AMD managed to turn the business around. The company is currently at number 2 in terms of market share in the microchips space, and investors possibly believe that the company is going to make more market share gains in the near term.

That could be one of the biggest reasons behind the remarkable rally. At the end of the day, AMD has managed to turn around its business due to the products that it has launched, and one of the more successful products has been the Ryzen CPU for personal computers. In Q4 2019, AMD took its share in the desktop CPU market to 18.3% and that reflects a 100% rise in just three years. In addition to that, the company is also aiming to move into the laptop market with its Ryzen brand. On the other hand, the company has also performed impressively in the server CPU market.

AMD’s EPYC server chips have managed to go toe to toe with Intel’s server chips. In Q4 2019, AMD had a 4.5% share of the market, and while that may not be much, it should be noted that back in Q4 2017, the company only commanded a 0.8% share of the same market. Hence, if the company can continue to boost its market share, this particular segment could help the company in making significant profits. On the other hand, the RX 5700 and RX 5700 XT graphic cards have also performed well in the sub $400 graphics card market.

Considering the fact that NVIDIA is hiking prices, it could give AMD an opportunity to muscle into this space and raise its market share. At this point, the stock has a price to sales ratio of as much as 80, and while the company may fulfill such tall valuations, it is quite a challenge. Hence, experts believe that the rally might not sustain. That being said, it is quite clear that the company is in a good position to further boost its market share. 

About Travis Garlick 1791 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.