Will AMD’s Polaris Match up to NVIDA’s Pascal?AMD) quarterly report may have come in better-than-expected, but, in my opinion, the stock doesn’t hold any value now. AMD rallied over 40% after the earnings report and I think investors have overestimated the chipmaker’s turnaround process. As a result, I think AMD is a sell right now.
Polaris on its way
AMD lost lion’s share of its market share to its foremost rival NVIDIA (NVDA) in the previous year, but this year the company has a strategy to gain some of it back.
AMD’s success eventually depends on its upcoming architecture called Polaris. The company is about to launch new graphics cards grounded on Polaris architecture this month. It has used all-new 14 nm manufacturing process due to which significant enhancements are anticipated. At present, AMD only holds around 20 percent market share, while the rest of the market share belongs to NVIDIA. The company is investing in Polaris to recapture its prior position in the GPU market.
However, it will not be easy to regain market share from NVIDIA. NVIDIA has already launched its new Pascal architecture that automatically places the company a few steps ahead of AMD. Recently, NVIDIA publicized its first two graphics cards grounded on its Pascal architecture.
The first one is the GTX 1080, valued at $599, which comes in place of the GTX 980 and is more powerful and efficient as compared to the Titan X, NVIDIA’s last-gen most powerful graphics card. The second one is the GTX 1070, valued at $379, which swaps the GTX 970 and will be available on the market starting the 10th of June this year. Though the GTX 1070 is costlier than GTX 970, the performance improvements should be extensive.
As per the company’s prior quarter earnings report, Polaris is designed to attract mainstream users instead of high-end users. AMD’s two versions of Polaris named Polaris 10 and Polaris 11 will aim towards the notebook segment and the mainstream desktop segment, with the objective being to support VR apps at mainstream price points. However, it is still not possible to judge how efficient Polaris architecture will be, but it can definitely be said that NVIDIA’s GTX 1080 may not have a new rival at all.
There’s no reason to believe that AMD will deliver on its promises this time as it has a history of losing to NVIDIA. After the recent rally, the stock doesn’t hold any significant value and the risk/reward ratio is unfavourable for long-term investors.
Published on May 13, 2016By Prudent Investor