Advanced Micro Devices Winning Near-Term Battle
Intel Corporation (NASDAQ:INTC) may still be the better chipmaker in the long term, but Advanced Micro Devices, Inc. (NASDAQ:AMD) has easily outperformed its much better rival year-to-date.
When I previously talked about AMD stock in September, my thinking was that Intel was producing the better chips and had an edge over Advanced Micro Devices, Inc.
But AMD stock is surging on the chart, up 25% over the past month, and a whopping 207% year-to-date.
While Intel continues to build the fastest chips, Advanced Micro Devices, Inc. entered into a massive and potentially game changing venture with Alphabet Inc (NASDAQ:GOOG) that could catapult AMD stock much higher.
Advanced Micro Devices stock surged after the Google unit announced it would be using AMD’s advanced graphic processors called the “AMD FirePro S9300 x2 Server GPU” in its “Google Cloud” Platform.
The GPU chips have been used extensively in gaming, but are now employed for areas that require super-fast machine processing such as deep learning and artificial intelligence (AI).
The deal is huge, and it has followed on the heels of a similar GPU deal for Advanced Micro Devices, Inc. with Alibaba Group Holding Limited (NYSE:BABA), in its rapidly growing cloud data center.
Advanced Micro Devices, Inc. is clearly making some major strides in this growth segment, which is what you want to see as the company reduces its dependency on its legacy PC chip business.
Wall Street More Optimistic for AMD
There is mounting optimism on Wall Street toward AMD stock.
Revenue growth has increased to 6.20% and 7.10% for 2016 and 2017, respectively, up from the previous 3.50% and 6.0%, in September (Source: “Advanced Micro Devices, Inc. (AMD), ” Yahoo! Finance, last accessed November 24, 2016.)
In addition, Advanced Micro Devices, Inc. is moving toward profitability in 2017, with a consensus $0.03 per diluted share and a high estimate of $0.14 per diluted share, according to Reuters.
Wall Street clearly favors the optimism at Advanced Micro Devices. Over the 30 days, there were 19 earnings per share (EPS) revisions to the upside for 2016, and 16 upward revisions for 2017. (Source: Ibid.)
The below AMD stock chart shows the upward move from the August-October 2015 bottom that was accompanied by higher trading volume and a break at resistance that has been in place since the beginning of 2015.
Note the breakout confirmed by the bullish golden cross in August 2016. The upward moves also corresponded with an upward trending moving average convergence/divergence (MACD) and a new “buy” signal.
Chart courtesy of StockCharts.com
Advanced Micro Devices stock is approaching tough long-term chart resistance at around $10.00, last encountered in 2010 to 2011, when the stock failed to push through. A break this time could vault AMD stock to the $14.00-$15.00 level from 2007.
So, while Advanced Micro Devices stock has the upper hand in the past year, the battle with Intel will be ongoing, but the recent moves are encouraging for AMD stock.