Is It Time to Bet on Advanced Micro Devices' Turnaround?

Shares of Advanced Micro Devices (AMD) have remain depressed for quite some time now as the chip maker has failed to outsmart its primary rival NVIDIA (NVDA). While NVIDIA reported another blowout quarter earlier this month, Advanced Micro Devices is still struggling

Polaris vs. Pascal architecture

Advanced Micro Devices did not manage to perform well in 2015 as the stock was down around 38 percent. In addition to the poor performance of last year, the company is off to an awful start in 2016 as well, as the stock is down 33.8 percent year to date.

The company faced many problems in 2015 and continues to face problem this year, whereas its foremost rival NVIDIA posted robust results in its most recent quarter.
In 2015, NVIDIA’s product line up was much better than that of Advanced Micro Devices, as the company’s most recent Fury and Fury X failed to meet the customers’ expectation.

After seeing Advanced Micro Devices’ Q3 earnings, it was clear that the company’s bad times are not over yet. Advanced Micro Devices’ top-line continued its decline, whereas cost declines in the form of reorganization and asset value have begun to weaken its capability to perform competitively against its lucrative opponents, NVIDIA and Intel.

The main problem with the company’s prospect of PC market share gain this year is that the vital catalyst for that gain merely would not be there. If the company has any faith of snatching market share from Intel, it resides only in its Zen architecture that company revealed at its Financial Analyst Day on May 2015. Advanced Micro Devices’ Zen architecture is assured to be more effective and powerful and grounded on a competitive 14-16 nm process. Preferably, Advanced Micro Devices should be shifting all its products based on 14-16 nm process.

Advanced Micro Devices appears to be confident on its Polaris GPU architecture based on 14 nm process. But, it should not forget that innovations come with time in tech industry, as NVIDIA will also be launching its Pascal architecture based on 16 nm FinFET technology. NVIDIA’s Pascal will probably be loftier or equal to AMD’s Polaris, and will be launched at the same time. The finest that the company can expect from Polaris is that it would not mislay any more market share to NVIDIA.

Conclusion

You know times are bad when the best thing to expect from Advanced Micro Devices is that its new product doesn’t lose more market share to NVIDIA. However, given the past, I don’t think investors should bet on Advanced Micro Devices to perform better going forward. Hence, I think investors should continue avoiding Advanced Micro Devices.
Published on Feb 24, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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