Will Advanced Micro Devices, Inc. (NASDAQ: AMD) stock rebound ahead of Ryzen 5 launch?
Shares of Sunnyvale, California-based, Advanced Micro Devices, Inc. (NASDAQ:AMD) were down by more than 3% in yesterday's trading session (April 4th) and also dropped further by around 1% in the initial after-market hours. This could have been partly caused by the downgrading of NVIDIA (NASDAQ:NVDA) stock by Pacific Crest analysts. Their research finds that desktop GPU market has reached saturation levels which could hurt NVIDIA. AMD has its flagship GPU launch slated for this quarter and the arguments of the Pacific Crest analysts might not have gone down well with some investors. AMD stock did not deliver a decent performance in the last month(March) by its standards but now, with another important product launch in Ryzen 5 on April 11, the question arises, will AMD stock see a rally like the one which preceded the Ryzen 7 launch? Of late, AMD stock has some positives going for it. To add to that, some recent news about Ryzen 5 CPUs suggest the Sunnyvale-based chipmaker could gain big going ahead. Let's take a closer look.Latest Ryzen 5 leaked benchmarks suggest Intel has more reasons to worry.
Ryzen 7 was an impressive performance CPU. Now, AMD is geared up to target the mid-range market with its Ryzen 5 CPU. We had previously highlighted why this could be a much bigger deal for AMD stock. The latest leaked Ryzen 5 benchmarks give one new reason for AMD stock investors to cheer. The initial leaked benchmarks of Ryzen 5 1600 review suggest great multi-threaded performance. The Ryzen 5 1600 beats its Intel (NASDAQ:INTC) counterparts with similar number of cores and threads in most of the major benchmarks. If you make a comparison both on core and thread counts, Ryzen 5's Intel counterparts are priced significantly higher. AMD delivers equivalent or better performance than Intel chips at much lesser cost, in some cases, as low as one-third of the Intel chips cost.
The only drawback for Ryzen 5 is that it doesn't manage to beat the Intel Core i7 6700K in 1080p gaming performance but the differences become small at 4K. The important point to note here is that performance difference in gaming is very little and the Intel chips are much costlier than those of AMD. The author of a Wccftech post opines, based on initial leaked benchmarks, that Ryzen 5 CPU "will be a very disruptive chip in the mainstream gaming market, bringing high-performance CPU performance to a mass majority of gamers building powerful PCs for themselves." However, one has to go by the actual reviews which will be out after April 11. One thing which can be assumed is that, this time around, AMD investors may not be spooked by any lackluster gaming performance reviews for the Ryzen 5 CPUs. As the recent "Ashes of the Singularity" game optimization for AMD Ryzen 7 processors resulted in significant performance increases, one can expect the AMD CPUs gaming performance could get better going ahead.BlueFin Research Partners report hints at better days ahead for AMD.
A recent Barrons post states that boutique research house BlueFin Research Partners’ analysts John Donovan and Paul Peterson reiterated an upbeat outlook for the PC market. This is the reason for their bullish outlook on AMD and Intel stocks. According to their research estimates, PC sales should remain healthy, boosted by more-desirable ultraportable laptops, and by new chips for desktop from AMD. To quote them:
"the mid-April availability of 4 new AMD (AMD) Ryzen 5 SKUs priced from $169 to $249 should propel demand with increased competition in the mainstream market. We see AMD as a share gain story, as we noted in our January 22nd 2017 Semiconductor Outlook. The company has compelling new CPU and GPU architectures with a leading-edge process, and is poised to gain share in PC, graphics, and server in our view."
If the estimates of BlueFin Research Partners’ analysts were to hold true, AMD is set to gain big, with its Ryzen 3 CPUs also scheduled for launch later this quarter. Also, another important point to consider is that the mainstream sub-$300 processor market is believed to be about twice as big as the high-end processor market. So, the success of Ryzen 5 CPU could mean a lot to AMD.Final Thoughts.
All in all, AMD (NASDAQ:AMD) stock may gain big with its mainstream market offerings. With a comparatively lackluster performance in the last month, many investors are betting against AMD stock, as short interest in AMD stock jumped near to one year high. However, it is too early to write off AMD stock. AMD stock could gain massively with the Sunnyvale chipmaker expected to take market share from Intel. Also, AMD stock has got a few price-target updates recently, all of which are equal to or above $16. We may not see a rally similar to the one before the Ryzen 7 launch but AMD stock still has more upside left from its present levels. As Ryzen 5 launch gets near, one can expect more leaked benchmarks coming in, and if the actual product is as per the expectations of leaked benchmarks then AMD stock could gain big. Investors should use any dip to buy AMD stock.
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