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Hello, Mr. Chips: A Look At AMD's Wild Year

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Hello, Mr. Chips: A Look At AMD's Wild Year

Advanced Micro Devices, Inc. (NASDAQ: AMD) shares soared on Wednesday after the company provided details on its newly-launched EPYC server processor.

With EPYC, AMD is taking dead aim at the x86 server chip market that is currently more than 99 percent controlled by rival Intel Corporation (NASDAQ: INTC).

As of noon Thursday, AMD was trading around $14.41, up another 3 percent on the day and 28 percent year-to-date.

Wild Ride

AMD shareholders have been on quite a ride since the stock bottomed at $1.75 in early 2016.

The stock rallied throuhout much of 2016 and reached a new 52-week high of $15.55 by late February 2017 in anticipation of the launch of its new Ryzen chips. Investors were betting on the disruptive potential that Ryzen chips could have on the gaming CPU market. However, it dipped back as low as $9.85 in early May after the company reported disappointing guidance for the year ahead.

Related Link: As All Eyes Turn To AMD, Intel Has Scheduled Its Own Launch Event In July

Rumors of a potential GPU licensing deal between AMD and Intel hit in May when IT news website Fudzilla reported that Intel had opted for a deal with AMD after its previous GPU licensing agreement with NVIDIA Corporation (NASDAQ: NVDA) expired earlier this year. AMD shares initially surged on the report, but it was quickly shot down by a number of experts and analysts.

Even AMD CEO Lisa Su dismissed the rumors herself at the JPMorgan Tech Conference in May.

“We’re not looking at enabling a competitor to compete with our products,” Su said.

After whipsawing between $13.42 ad $11.21, the EPYC launch now has AMD trading back at six-week highs above $14.

The Competition

With the entire $16.5 billion server chip market at stake and companies such as Microsoft Corporation (NASDAQ: MSFT) and Baidu Inc (ADR) (NASDAQ: BIDU), Hewlett Packard Enterprise Co (NYSE: HPE), Asus, Gigabyte, Inventec, Lenovo, Supermicro, Tyan and Wistron all currently working on integrating EPYC into their systems, Intel and its investors are likely not too thrilled with AMD at the moment. 

Competition in the server chip market is only expected to get hotter throughout the rest of the year, with new chips on the way from QUALCOMM, Inc. (NASDAQ: QCOM), Nvidia, and even Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL).

Intel is expected to unveil its answer to the EPYC, the Purley Xeon server CPU platform, on July 11.

Image: Luis Romero, Flickr

Latest Ratings for AMD

DateFirmActionFromTo
Nov 2019MaintainsOutperform
Oct 2019UpgradesHoldBuy
Oct 2019MaintainsNeutral

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