We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Advanced Micro (AMD) Should Be in Investors' Portfolio?
Read MoreHide Full Article
It is definitely a good time for investors to buy Advanced Micro Devices, Inc. (AMD - Free Report) shares.
Over the last one year, the stock has surged 295.12% and crushed the Zacks Electronics - Semiconductors industry, which increased 49.8%. Following the release of its quarterly numbers on Oct 20, Advanced Micro shares have gained over 62% so far.
What’s Driving its Growth?
Advanced Micro reported encouraging third-quarter 2016 results wherein the top and bottom lines surpassed the Zacks Consensus Estimate.
Also, both revenues and earnings increased on a year-over-year basis, primarily driven by higher sales of semi-custom System on Chips (SoC) and better-than-expected seasonal graphics sales. For full-year 2016, Advanced Micro expects revenues to be up almost 6% from 2015.
Advanced Micro entered into a definitive agreement to form a joint venture (JV) with Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC) in Apr 2016. This agreement is part of the company’s efforts to gain share in the fastest growing regional data center server market.
As part of the JV, the company licensed its high-performance processor and SoC technology to THATIC for the Chinese market. In return, Advanced Micro will get $371 million cash and 15% stake in the new entity. The deal is of great importance to the company since it will accelerate its growth and better monetize its valuable assets
Despite its late entry, Advanced Micro has attained the position of a major player in the microprocessor and graphics processing markets. The company has had a very rough time because of the strength and market position of its two primary competitors Intel (INTC - Free Report) and NVIDIA (NVDA - Free Report) . Advanced Micro combined its own engineering talent with that of ATI Technologies to develop capabilities in both these areas. Considering the might of its competitors, the company has done well to hold its own in the face of significant changes in the markets it serves.
In Sep 2015, Advanced Micro formed Radeon Technologies Group to focus on its graphics business and strengthen its performance in traditional graphics markets. The new group will now be able to pursue its strategy for standalone graphics chips and strengthen its position as a graphics chip supplier and compete better with NVIDIA.
The company’s Fusion strategy went a long way toward maintaining its market position. The first of the series was the Brazos chip, which started shipping in 2010. This was an accelerated processing unit (APU) combining the Bobcat CPU core with the DX11 GPU, targeting smaller low-power computing devices. AMD pushed the envelope with regard to both performance and power consumption with its Bristol Ridge APUs, a more significant upgrade over Kaveri and Carrizo, shipped in Mar 2016. Bristol Ridge delivered a 20% improvement in the already industry-leading graphics performance and an increase up to 20% in CPU performance.
As the upcoming mobile APUs are suitable for tablets, hybrids and convertibles, Advanced Micro might be able to increase its relevance in these markets. Despite strong competition, the current product lineup should be beneficial for the company and continue to help it regain some market share.
Bottom Line
Advanced Micro’s efforts to cope up with slowing PC market have been commendable. Given the persistent weakness in the core PC business it has, like Intel, started investing in its embedded business. The company’s embedded business performed well in 2016 and is expected to continue doing so in 2017. The strength should continue in the future too as the company scores more wins. Given continued product enhancements and design wins at strategic players in key verticals such as digital signage and medical equipment, we expect the momentum to continue through 2017.
The company is currently targeting the communications, industrial and gaming segments of the market and there appear to be suitable design wins to generate substantial revenue growth over the next few years. New semi-custom SoCs are expected to deliver noteworthy performance per watt compared with its previous generation and offer industry-leading graphics capabilities for embedded designs.
The company’s position in key markets has improved with the introduction of several Accelerated Processing Units and GPUs. Advanced Micro’s rumored licensing deal with Intel should help it gain more traction in the GPU space and close the market share gap with NVIDIA. Moreover, partnerships with the likes of Alibaba Group (BABA - Free Report) for the supply of Radeon Pro GPUs for its cloud services will boost its competitive prowess.
The company’s FirePro server GPUs have also been selected by Alphabet’s Google to power its cloud platform in 2017, which again indicates the growing adoption of Advanced Micro products. Additionally, upcoming new products like Zen will drive top-line growth in the long run.
Hence, we believe there is still much momentum left in this Zacks Rank #2 (Buy) stock, with a VGM Score of ‘B,’ and market cap of over $10.51 billion. It posted an average positive earnings surprise of 9.77% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Why Advanced Micro (AMD) Should Be in Investors' Portfolio?
It is definitely a good time for investors to buy Advanced Micro Devices, Inc. (AMD - Free Report) shares.
Over the last one year, the stock has surged 295.12% and crushed the Zacks Electronics - Semiconductors industry, which increased 49.8%. Following the release of its quarterly numbers on Oct 20, Advanced Micro shares have gained over 62% so far.
What’s Driving its Growth?
Advanced Micro reported encouraging third-quarter 2016 results wherein the top and bottom lines surpassed the Zacks Consensus Estimate.
Also, both revenues and earnings increased on a year-over-year basis, primarily driven by higher sales of semi-custom System on Chips (SoC) and better-than-expected seasonal graphics sales. For full-year 2016, Advanced Micro expects revenues to be up almost 6% from 2015.
ADV MICRO DEV EPS Diluted (TTM)
ADV MICRO DEV EPS Diluted (TTM) | ADV MICRO DEV Quote
Advanced Micro entered into a definitive agreement to form a joint venture (JV) with Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC) in Apr 2016. This agreement is part of the company’s efforts to gain share in the fastest growing regional data center server market.
As part of the JV, the company licensed its high-performance processor and SoC technology to THATIC for the Chinese market. In return, Advanced Micro will get $371 million cash and 15% stake in the new entity. The deal is of great importance to the company since it will accelerate its growth and better monetize its valuable assets
Despite its late entry, Advanced Micro has attained the position of a major player in the microprocessor and graphics processing markets. The company has had a very rough time because of the strength and market position of its two primary competitors Intel (INTC - Free Report) and NVIDIA (NVDA - Free Report) . Advanced Micro combined its own engineering talent with that of ATI Technologies to develop capabilities in both these areas. Considering the might of its competitors, the company has done well to hold its own in the face of significant changes in the markets it serves.
In Sep 2015, Advanced Micro formed Radeon Technologies Group to focus on its graphics business and strengthen its performance in traditional graphics markets. The new group will now be able to pursue its strategy for standalone graphics chips and strengthen its position as a graphics chip supplier and compete better with NVIDIA.
The company’s Fusion strategy went a long way toward maintaining its market position. The first of the series was the Brazos chip, which started shipping in 2010. This was an accelerated processing unit (APU) combining the Bobcat CPU core with the DX11 GPU, targeting smaller low-power computing devices. AMD pushed the envelope with regard to both performance and power consumption with its Bristol Ridge APUs, a more significant upgrade over Kaveri and Carrizo, shipped in Mar 2016. Bristol Ridge delivered a 20% improvement in the already industry-leading graphics performance and an increase up to 20% in CPU performance.
As the upcoming mobile APUs are suitable for tablets, hybrids and convertibles, Advanced Micro might be able to increase its relevance in these markets. Despite strong competition, the current product lineup should be beneficial for the company and continue to help it regain some market share.
Bottom Line
Advanced Micro’s efforts to cope up with slowing PC market have been commendable. Given the persistent weakness in the core PC business it has, like Intel, started investing in its embedded business. The company’s embedded business performed well in 2016 and is expected to continue doing so in 2017. The strength should continue in the future too as the company scores more wins. Given continued product enhancements and design wins at strategic players in key verticals such as digital signage and medical equipment, we expect the momentum to continue through 2017.
The company is currently targeting the communications, industrial and gaming segments of the market and there appear to be suitable design wins to generate substantial revenue growth over the next few years. New semi-custom SoCs are expected to deliver noteworthy performance per watt compared with its previous generation and offer industry-leading graphics capabilities for embedded designs.
The company’s position in key markets has improved with the introduction of several Accelerated Processing Units and GPUs. Advanced Micro’s rumored licensing deal with Intel should help it gain more traction in the GPU space and close the market share gap with NVIDIA. Moreover, partnerships with the likes of Alibaba Group (BABA - Free Report) for the supply of Radeon Pro GPUs for its cloud services will boost its competitive prowess.
The company’s FirePro server GPUs have also been selected by Alphabet’s Google to power its cloud platform in 2017, which again indicates the growing adoption of Advanced Micro products. Additionally, upcoming new products like Zen will drive top-line growth in the long run.
Hence, we believe there is still much momentum left in this Zacks Rank #2 (Buy) stock, with a VGM Score of ‘B,’ and market cap of over $10.51 billion. It posted an average positive earnings surprise of 9.77% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>