How AMD Proved the Bears Wrong & Outperformed NVIDIA

AMD (AMD) was a beaten-down stock in 2015, however, the company has managed to twist its fate nicely this year. AMD is up over 400% from its 52-week low levels and it looks like the company will continue moving higher.

The company delivered strong second quarter results, as it observed year over year top-line growth in the most recent quarter for the first time since 2014. The company shared revenue of $1.02 billion, successfully beating analyst estimates, whereas, EPS came in at -$0.05, again outpacing analyst estimates by $0.03.

On the other hand, AMD perceives the semi-custom chips segment to perform better in third quarter, citing a projected robust holiday season.
AMD also anticipates third quarter revenue to surge in the range of 15% to 21%.

The main reason behind the company’s amazing success is the release of its new graphics card Radeon RX 480 which is based on Polaris architecture. This new architecture comprises new major upgrades such as the use of 14 nm technology. RX 480 is available in the market for just $199, and is designed to appeal to mainstream users.

However, AMD has played it smart by launching an efficient graphics card at very less amount. It is clear to everyone that NVIDIA (NVDA) is AMD’s only rival and has been outperforming it for years. NVIDIA has also launched some new graphics cards, but initially, it only launched high-end graphics cards, thereby leaving the gate open for AMD to gain market share.

At present stage, NVIDIA’s GTX 1060 accounts for the primary rival of RX 480, but is priced greater than Rx 480. NVIDIA currently holds around 75% market share, but AMD’s RX 480 will certainly help the company steal some market share from NVIDIA considering the strong quarter reported by the company.

Furthermore, AMD is on its way to launch some more graphics cards, and will soon launch a graphics card specifically for high-end users which will directly compete with NVIDIA’s GTX 1080 card. If the company successfully launches an efficient high-end graphics card that performs better than GTX 1080 and priced less as compared to NVIDIA’s GTX 1080, this will surely snatch a lot of market share from NVIDIA.

Conclusion

AMD has played it really smart and it looks like the company is headed in the right direction under the leadership of their new CEO. With the company expected to launch new high-end graphics card soon, the stock could continue moving higher at NVIDIA’s cost.
Published on Aug 3, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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