Advanced Micro Devices: This Is Why AMD Stock Fell

amd stockAMD Stock Takes Damage, but Finishes 2016 Strong

Advanced Micro Devices, Inc. (NASDAQ:AMD) fell more than one percent on Thursday, adding to a near six percent decline since Wednesday trading as booming chipmaker companies—including AMD stock—take hits over their future prospects going into the new year.

Along with NVIDIA Corporation (NASDAQ:NVDA), AMD stock has had a rough post-Christmas run in what has otherwise been a stellar 2016 for the two companies. AMD stock, for instance, has climbed almost 300% since the beginning of the year, so Thursday’s fall is hardly enough to dampen what has been one the best-performing shares in 2016.

The questions surrounding the chipmakers heading into 2016 have to do with growth potential and addressable markets. Both AMD stock and NVDA stock have made headway into machine learning and artificial intelligence (AI) chip technology, which are poised for growth. Gaming and other more traditional markets, however, still account for the bulk of their profits and represent a smaller growth potential.

NVDA stock, for instance, has been the target of short sellers recently, which has hurt its shares. Many, including our own analysts, remain bullish on AMD stock, believing it will rise to $15.00 per share in 2017.

Others are concerned over the strong competition not only between AMD and Nvidia, but also from Intel Corporation (NASDAQ:INTC) in the chipmaking industry. In fact, with these three strong companies working in opposition, the real beneficiary beyond the savvy investor will be the consumer, as the companies will certainly drive each other into developing better (and more affordable) chips. (Source: “Should I Buy Advanced Micro Devices, Inc (AMD) Stock? 3 Pros, 3 Cons,” Investor Place, December 27, 2016.)

In any case, with AMD stock down on Thursday, it is still heading into 2017 with a strong outlook, though whether it will be able to sustain the stellar growth it saw in 2016 remains to be seen.