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In a bid to capitalize on the growing popularity of gaming devices, Advanced Micro Devices Inc. (AMD - Analyst Report) recently launched a graphic processing unit (GPU) — AMD Radeon™ R9 290 — the latest addition to the AMD Radeon™ R9 Series GPUs.

The AMD Radeon R9 290 graphics card is ideal for users who need superior graphic performance for gaming. Powered by AMD Graphics Core Next (GCN) architecture, the new graphics card supports Mantle technology and provides strong graphics performance from web browsing to video editing.

Priced at $399, the new graphics card includes 2,560 stream processing units, 4GB GDDR5 memory, up to 5.0Gbps memory clock speed and 320GB/s memory bandwidth. Also, AMD’s GPUs support DirectX® 11.2, OpenGL 4.3 and Mantle, which give it the desired speed for optimal graphics solutions required in notebooks and desktops.

Additionally, AMD Radeon R9 290 graphics card features a new AMD TrueAudio technology, which gives enhanced sound effect for gamers through stereo headsets and speakers3. Consumers prefer an improved soundscape for gaming along with rich graphics. Thus, AMD’s revenues stand to benefit significantly if the latest GPU can cater to the rising demand of the users.

AMD’s processors have become highly popular among gaming console makers and will be used in Sony Corp’s (SNE - Snapshot Report) PlayStation 4, to be released on Nov 15 in the U.S. AMD’s processor has also been used in Microsoft Corp.’s (MSFT - Analyst Report) new Xbox video game console, to be launched on Nov 22.

Gaming has become a focus area for AMD now. Both the next generation gaming consoles will feature AMD accelerated processing units (APUs), which will boost the company’s business. We believe that these wins have positioned AMD at the center of the console gaming industry and will lessen the company’s dependence on the declining personal computer market. It will possibly help the company to regain some of the lost market share from rivals like NVIDIA (NVDA) and Intel (INTC - Analyst Report).

A report from IDC estimates that there will be 257 million active consoles worldwide by 2015. These estimates suggest that there are opportunities for companies like AMD to increase their stakes.

The gaming hardware market is currently reeling under competitive pressure from emerging social networking sites and competing hardware platforms such as smartphones and tablets. However, we expect the hardware sales to increase because of the upcoming new consoles. Since AMD’s products are being used in all the major platforms, it should see good growth from the segment.

AMD is the world's second-largest maker of microprocessors. In the last reported quarter, AMD’s top-line numbers were better than its guidance, supported by the ramp up of semi-custom System-on-Chips, new products and strong mobile design wins. Also, the company’s bottom line beat the Zacks Consensus Estimate.  

Currently, AMD holds a Zacks Rank #3 (Hold).

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