Advanced Micro Devices Inc (NASDAQ: AMD) has emerged as a formidable player in the semiconductor space over the last few years. Although AMD might be a small player in comparison to giants like Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA), in the CPU and GPU space, the company’s business has managed to grow steadily in recent times. Meanwhile, AMD stock is rising.
The AMD stock price surge in the last five years itself shows that it is giving its competitor a run for their money. With a market cap of over $60 billion AMD has managed to significantly eat into Intel’s market share of CPU chips. Now, AMD is also looking to enter NVIDIA’s den of making enterprise-grade GPU units.
AMD’s Radeon Pro VII GPUs come with impressive specs and jaw-dropping prices in comparison to Intel’s offering. While Intel’s equivalent offering costs above $10,000, the AMD’s Radeon Pro VII GPU is price only for $1900. Well, this will help AMD to significantly accelerate its market position in the GPU sector.
AMD’s Strong Financials and AMD Stock
Looking at its latest developments, analysts have turned bullish for AMD with its solid and further improving outlook. Over the last two years, AMD has successfully managed to improve its gross margin by 25%. This shows that the company is significantly growing its revenues thereby providing a long-term opportunity for shareholders.
With the company’s margins improving with time, this could mean higher EPS for the shareholders. Apart from the gross margin, AMD has put a good focus on improving its debt and leverage trend. The debt has dropped while EBIDTA has increased during the same time.
Simultaneously, the company’s cash pile has improved keeping AMD in a good net-cash position. Over the last few years, AMD has significantly invested in R&D which shows its seriousness of developing the next-generation semiconductor chips. Rosenblatt Securities analyst Hans Mosesmann predicts more upside for the AMD stock. He said:
“At the end of the day, the AMD story is more than just x86 CPU share gains, it’s about accelerating computing dynamics that are secular in nature, in which the company is executing near-flawlessly. We continue to favor AMD shares on powerful and secular trends; plus, the gravy coming from the Street’s reluctance or allergy to the possibility of AMD’s continued success to traditionally more powerful competitors”.
Currently, the AMD stock is trading at $55.17 as on last Friday’s closing. While the stock has seen some headwinds during the broader market correction in the month of March, the stock has quickly recovered. AMD stock is trading 10% positive year-to-date.