AMD Stock: Can Advanced Micro Devices, Inc. Beat NVIDIA Corporation?

AMD StockIn recent years, Advanced Micro Devices, Inc. (NASDAQ:AMD) has been living in the shadow of NVIDIA Corporation (NASDAQ:NVDA). Unsurprisingly, AMD stock also underperformed NVDA stock by a wide margin. But with a new technology, AMD could make a strong comeback.

AMD GPUs Outperforming NVIDIA’s

Both companies make graphics processing units, or GPUs. And so far, NVIDIA is the most dominant player. As a GPU supplier, NVIDIA captured 81.1% of the market share in the third quarter of 2015, leaving only 18.8% to AMD. (Source: “GPU Market Share Results for Q3 2015-AMD and Nvidia See Increased AIB GPU Shipments as PC Gaming Market Grows,” WCCFtech, last accessed March 30, 2016.)

Nobody remembers second place finishers. While NVIDIA stock went on a steady climb, AMD stock has been left in the doldrums. In the past five years, AMD stock plunged more than 65%. Ouch!

Now, AMD might be able to go back to the center stage with the help of new technology. “Asynchronous shaders,” which can extract more performance out of available hardware while improving efficiency, has become available on AMD’s “Graphics Core Next” (GCN) GPUs.

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The new feature would be great for gamers as it improves the performance of “DirectX 12,” Microsoft’s latest set of application programming interfaces (APIs) for multimedia. According to Sanjay Chaurasia, analyst at Nomura Holdings, Inc., AMD’s GPUs have “consistently shown better performance than NVIDIA’s Maxwell GPUs on several DX12 optimized games.” (Source: “AMD’s DirectX12 Support and Async May Take Share from Nvidia, Says Nomura,” Barron’s, March 29, 2016.)

A more technical review showed that AMD’s asynchronous compute engines could improve DirectX 12’s performance by 46%. (Source: “AMD Improves DirectX 12 Performance by up to 46% with Asynchronous Compute Engines,” WCCFtech, last accessed March 30, 2016.)

Note that AMD’s products are already widely used in gaming. Both the “Xbox One” and “PlayStation 4” use AMD’s accelerated processing units (APUs). Due to the merits of the async feature, Nomura believes that “AMD could gain share among game developers and publishers as they might see benefits of optimizing DX12 on AMD GPUs as well.” (Source: Barron’s, op cit.)

Virtual reality is another segment that could be huge for AMD. In fact, the company already has a significant presence in the industry. Earlier in March, AMD announced that it had an 83% market share in home entertainment VR systems. Its partnerships with the “Oculus Rift” and “HTC Vive Pre” gave the company a head start in the VR industry. (Source: “AMD Takes 83% Share of Global VR System Market, Driving Leading VR Experiences for Consumers and Developers,” Advanced Micro Devices Inc, March 14, 2016.)

Other than the graphics card market, AMD is also looking to take back market share in the desktop processor business. Also in March, the company introduced two new additions to its desktop processor lineup—“AMD A10-7890K” and “AMD Athlon X4 880K.” (Source: “AMD Enhances Its Desktop Processor Line Up With New A10-7890K and AthlonX4 880K Processors, Delivering Superior Performance, Features, and Near-Silent Operation,” Advanced Micro Devices Inc, March 1, 2016.)

These chips deliver super fast performance but are also more energy-efficient and can run almost silently. In fact, the new AMD A10-7890K is the fastest AMD desktop APU ever released. This could be a chance for AMD to challenge industry giant Intel Corporation (NASDAQ:INTC).

The Bottom Line on AMD Stock

Of course, it remains to be seen whether the new chips would boost AMD’s market share. But with new technology at hand, there is still a chance for AMD stock to make a comeback.