The coronavirus crisis has come as a shock to the markets and stocks across a wide range of sectors have been beaten down over the past week. However, the tech sector has shown remarkable resilience during this period, and one of the standout stocks in this regard is that of Advanced Micro Devices Inc.(NASDAQ:AMD).
Key Things to Watch
AMD stock has only declined from its highs of $59.3, and under the circumstances, that is a commendable performance. Although it has a price to earnings ratio of 59.1, it might be worthwhile for investors to take a closer look at the company’s growth prospects.
Due to the coronavirus pandemic, plenty of companies have to withdraw projections, but AMD projected revenues growth of as much as 25% this year. Markets might be happy with these projections, and additionally, it might not be difficult for the company to achieve it. Work from home norms is expected to boost the sales of laptops, and by extension, it is going to help in stronger chip sales. In addition to that, it should not be forgotten that the lockdowns might also result in a spike in gaming console sales, and that could be another trigger for higher growth for AMD.
The stock is on the right track, considering the fact that AMD has launched a range of new-generation products, and those products are expected to generate higher margins. For instance, AMD’s gross margins rose from 41% in Q4 2019 to 46% in the first quarter of 2020. AMD has also been boosting its market share across a range of segments quite steadily in recent times, and it managed to raise its market share in the desktop space as well.
The market share for the company in the desktop space stood at 18.3% at the end of 2019, up from only 12% back in 2017. The company’s cash balance stands at $1.4 billion, and that is another positive for AMD. The stock may have declined, but this could be an opportunity for long term investors to enter the stock.