Why is AMD stock up 20 today
AMD: The stock goes up and up - but is the end in sight?
Analysts continue to praise the outstanding fundamental performance of AMD - but despite all the current successes, the chip manufacturer threatens to oversleep an important future trend.
The analysts of the RBC Capital Markets raise their price target for the AMD share by ten dollars to now 63 dollars. The reason: a prospective increase in market share! The semi-custom deals with Google, Sony and Microsoft for their new cloud and video game technology also contribute to this.
According to RBC analyst Mitch Steves, the share of AMD graphics and processor chips in the PC market could rise well over 20 percent and he is convinced that the semiconductor manufacturer can gain even more market share in the server sector by 2021. These statements drive the share up by over four percent at times.
Strong in the core area of graphics
There are good arguments behind this assumption: The next generation of Sony's Playstation and Microsoft's Xbox (both from autumn 2020) as well as Google's cloud gaming service Stadia will be equipped with AMD graphics processors. With sales prices and quantities similar to those of the current devices, around six million consoles are likely to be sold in the first few months. That would bring AMD $ 600 million in sales.
The “Enterprise, Embedded and Semi-Custom” segment (EESC), which has recently been flagging, would thus find new sales strength. However, one future topic remains by the wayside: processors for processing artificial intelligence.
[We] rely on our existing chip technology to support AI applications.Lisa Su, CEO of Advanced Micro Device (AMD) Q4 conference call
Missed the AI connection?
While competitors Nvidia and Intel are investing in chips for artificial intelligence - the latter bought an AI chip laboratory with Hibana Labs for two billion dollars - AMD is focusing on existing chip technology with regard to AI support, according to CEO Lisa Su.
According to the "Analytics India Magazine", the Hibana chips are already stronger at processing AI than conventional AMD chipsets and in many areas on a par with Nvidia chips.
AMD will report on current margin and market share targets on March 3rd during its own Financial Analyst Day.
AMD is on its way, but the road ahead could be more rocky. In addition to the possibly missed connection to the future topic of artificial intelligence, the price war initiated by Intel in the PC market and the Chinese plan to set up its own semiconductor industry are current challenges.
Nevertheless, thanks to the semi-custom chips for the new generation of consoles and the stronger data center investments by large Chinese and American corporations, AMD has enough ammunition to continue fueling share prices in 2020 with fundamental successes for the time being. Investors stick with it. Further semiconductor recommendations from the SHAREHOLDER can be found here.
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