Analyzing the Turnaround Chances of Advanced Micro Devices

2015 was an awful year for Advanced Micro Devices (AMD), as the company’s new products failed to meet public expectation, and due to this its foremost rival NVIDIA got a major lead. In 2015, in terms of GPU market, NVIDIA commanded more than thrice the market share of Advanced Micro Devices.

During the last five years, the main reason behind Advanced Micro Devices' awful performance is its microarchitecture grounded on Bulldozer and its several revisions. Due to its Bulldozer, the company has been losing all its battle against Intel in both server CPU as well as PC CPU market.
Intel’s chips are much better than Advanced Micro Devices’ and apprehended a major lead when it comes to single-threaded performance.

However, Advanced Micro Devices decided to overcome that problem by releasing its new Zen microarchitecture at the end of 2016. This new architecture will be based on 14 nm process, a lot better than its previous Bulldozer architecture.

The company detailed that there will be 40 percent gain in instructions per second, a measure of single-threaded performance. On the other hand, Intel is also on its way to launch 10 nm process based architecture, but the company is not likely to release 10 nm process based architecture till 2017. Therefore, the time gap between Advanced Micro Devices' and Intel’s architecture launch will provide a lead to the company, and Intel may finally face a tough competition in the PC CPU market, and sooner or later, in the server CPU market.

This is all possible if the company successfully launch its Zen architecture on time, and its architecture must deliver promised performance. If Zen fails to deliver promised performance and to meet public expectations, it is hard to conceive a situation where the company returns to profitability.

Apart from this, in terms of GPU market, new graphics cards might help to stop losing more market share, but it will be very difficult for the company to snatch market share from NVIDIA. Advanced Micro Devices needs to enhance its GPU business to overcome the gigantic losses faced by the company in 2015.


Having been an Advanced Micro Devices bear for quite some time, I still don't think the stock is a good investment option. The company is struggling to hold onto its market share and given the history, I wouldn't suggest betting on the stock.
Published on Mar 17, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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