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Advanced Micro, Bethesda Partner to Better Gaming Experience

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Advanced Micro Devices, Inc. (AMD - Free Report) stock has been a consistent performer over the last 12 months. While the Zacks Electronics – Semiconductors industry gained 70.8%, the stock appreciated a whopping 544.8%, primarily driven by strong adoption of its computing and graphics products.

The company’s products continue to gain rapid adoption, which has driven top-line growth in the recent past. AMD recently announced a long-term strategic partnership with Bethesda Softworks at the 2017 Game Developers Conference via the AMD “Capsaicin” webcast and press event.

The objective of the partnership is to further game technology development and enhance the overall PC gaming experience.

How is it Going to Help AMD?

Bethesda Softworks has been in the gaming business for over 30 years now and has produced some popular games such as The Elder Scrolls series, DOOM, Fallout 3 and 4, Wolfenstein: The New Order, DishonoredandQuake, which taken together have sold more than 80 million copies worldwide.

On the other hand, AMD’s Central Processing Units (CPUs) and Graphics Processing Units (GPUs) have a great fan following in the gaming sphere.

We note that, in the past, Vulkan a low-level Application Program Interface (API), was implemented in Bethesda Softworks’ DOOM that resulted in enhanced performance and improved graphics of the game that resulted in enhanced gaming experience.

We believe that this kind of collaboration will improve demand for AMD’s CPUs and GPUs among game software developers. Also, as Bethesda’s games will be optimized for AMD chips it will be a win-win situation for both the companies to gain further traction in the gaming arena.  

As per a PwC report, total video games revenue is projected to reach $20.3 billion by 2020 that is growing at a CAGR of 3.6%. Given the huge opportunity the sector offers, AMD’s move looks aptly timed and augurs well for the company in the long run.

However, there is stiff competition in the gaming space with the presence of some major players such as NVIDIA (NVDA - Free Report) and Microsoft (MSFT - Free Report) . Nevertheless, we believe that increasing adoption of the company's products like Radeon and FirePro server GPUs will drive top-line growth going forward.
 

Zacks Rank & Stocks to Consider

At present, AMD carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology space includes Applied Optoelectronics, Inc. (AAOI - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, the Zacks Consensus Estimate for Applied Optoelectronics’ current year has improved to $3.14 from $1.45 over the last 60 days.

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