It Is Time to Dump Advanced Micro DevicesAMD) has been facing severe problems from the last few years, and its foremost rivals NVIDIA (NVDA) and Intel (INTC) are the reason behind it. In 2015, Advanced Micro Devices failed to compete against both the companies in the GPU as well as the CPU front, and lost considerable market share. However, the company has now publicized a new Polaris architecture, which comprises several changes compared to its previous architecture.
However, even if Advanced Micro Devices manages to win back market share from NVIDIA because of Polaris, there is no way to justify the stock’s recent rally. With Advanced Micro Devices yielding triple-digits returns in just a few months, I think it is time for investors to book profits.
The company is about to launch its new Radeon RX 480 graphics card based on its Polaris architecture on 29th June. RX 480 will be available in the market for $199, as the company strategizes to focus on mainstream market first, and this clearly suggests that it has handed over the lucrative high-end market to NVIDIA very easily.
Advanced Micro Devices also planned to introduce two more graphics cards RX 470 and RX 460, but they will be lower-end cards, as only few details have been disclosed by the company. On the other hand, NVIDIA also recently launched its Pascal architecture which will definitely prove to be a robust competitor to Polaris.
NVIDA has already launched its new graphics cards, GTX 1080 and GTX 1070, grounded on Pascal architecture, and the graphics cards have already started paying off. NVIDIA’s GTX 1070 has become more popular compared to GTX 1080. GTX 1070 Founder’s edition went out of stock very soon after the launch. However, NVIDIA has boosted its GTX 1070 production rate to meet the surging demand.
Advanced Micro Devices will certainly gain some market share until NVIDIA launches mainstream graphics cards. However, NVIDIA has grasped a top position in the industry due to its wise decision, and it will certainly launch new mainstream graphics cards in the approaching months. And it is very obvious that NVIDIA’s mainstream graphics will be a tough competitor for Advanced Micro Devices’ GTX 480.
There’s no logical way to justify Advanced Micro Devices’ recent rally. Even if the company manages to win back market share from NVIDIA, it will struggle to sustain its current valuation. As a result, I think investors should start booking profits.
Published on Jun 28, 2016By Prudent Investor