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AMD Ups Game Against NVIDIA and Intel With New Products

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Advanced Micro Devices (AMD - Free Report) recently exhibited its next generation CPU and GPU products at Computex, 2018. The company has ramped up its CPU & GPU portfolio, which strengthen its competitive position against the likes of NVIDIA (NVDA - Free Report) and Intel (INTC - Free Report) .

The newly announced 7nm AMD Radeon Vega GPU is tailor-made for servers and workstations. Moreover, the new high-end Radeon RX Vega 56 and 64 Nano graphics card is likely to provide the company an edge against NVIDIA’s GeForce GTX 1080 and 1070 cards, which were released last year.

Meanwhile, NVIDIA keeps the gamers waiting for its hyped release of GeForce GTX 11 Series graphics cards.

Additionally, Radeon based RX Vega56 graphics card was demonstrated on Samsung’s 80” QLED TV. AMD claims that the architecture is designed for tear free smooth game play. It can run either on an equipped PC or with Microsoft’s (MSFT - Free Report) Xbox One S or Xbox One X gaming console.

AMD also showcased second generation Threadripper CPU powered by Ryzen technology. 12nm Zen+ architecture will support the Ryzen second generation based Threadripper 2. The chip is touted to be the highest-end chip featuring a whopping 32 cores and 64 threads, per PC Gamer. The product is scheduled to launch in the third quarter of fiscal 2018.

Notably, Intel recently unveiled the 28-core PC chip. Higher core count of Threadripper 2 is expected to boost the competitive position of AMD against Intel.

The EPYC processor, codenamed "Rome" which runs on 7nm Zen+ architecture, was also demonstrated at Computex. The processor is under testing and the company aims to launch it in 2019. However, EPYC driven SA1 Tencent Cloud Service is available.

Gaming PC & GPU Demand to Boost AMD’s Growth

Per IDC, PC shipments remained flat in the first quarter of 2018 compared with the anticipated decline of 1.5%. The traction witnessed by gaming PCs is likely to have averted the decline.
 
Per a Jon Peddie Research (“JPR”) report, with an increase in the number of people engaging in PC gaming, the related hardware market is experiencing a huge boost. Per the research firm, the market exceeded $30 billion mark in 2016 and is anticipated to witness compound annual growth rate (CAGR) of 6% through 2019.

Notably, growth in the gaming hardware market is driving demand for graphics processors as well. Per Allied Market Research, the GPU market is anticipated to reach $157.1 billion by 2022 at a CAGR of 35.6% from 2016 to 2022.

We believe both AMD and NVIDIA are well poised to benefit from the strong demand of gaming PCs. However, AMD’s expanding GPU portfolio catering to every price points is well-poised to threat NVIDIA’s dominance going forward.

Despite its late entry, AMD is attaining the position of a major player in GPU market. The company started small, targeting the low-end segment and gradually built a position for itself.

JPR report reveals that AMD impressively increased its GPU shipments and gained market share from 14.2% to 14.9% in the first quarter of 2018. The gain can be primarily attributed to the robust adoption witnessed by the company’s expanding product portfolio for workstations and cryptocurrency mining.

Furthermore, increasing adoption of AI techniques and machine learning tools in industries like gaming, automotive and blockchain are primarily responsible for driving GPU demand. AMD is benefiting from this demand.

Although Intel’s market share dipped from 67.4% to 66.6%, the company continues to be a leader. Meanwhile, NVIDIA maintained its market share at 18.4%.

We believe that the launch of the new graphics cards will help AMD increase its market share further, going forward. Shares of AMD have returned 52.4% year to date.



Expanding Customer Base Bodes Well For AMD

AMD’s products in recent times have been selected by the likes of Cisco (CSCO - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) . These contracts are helping AMD fast penetrate the server market.

Cisco UCS server platform is leveraging AMD products to offer 20% more storage capacity per rack, 128% more cores and 50% more servers.

Other Developments

AMD and Hewlett Packard Enterprise unveiled new EPYC-based HPE ProLiant DL325 Gen10 server platform at the Computex event.

Notably, 32 “Zen” processor cores along with 40 terabytes of NVMe and two terabytes of memory storage lower the cost per virtual machine (VM) by 27%.

Zacks Rank

AMD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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