The bad days seem to be over for Advanced Micro Devices, Inc. (NASDAQ:AMD) stock. In the past 30 days, AMD stock surged an impressive 36.6%!
However, if you look at a longer time horizon, you’ll see that things haven’t really been that rosy. In the past five years, AMD stock has plunged a dramatic 70.8%.
So, is the recent surge a sign of a major turn-around? Or is it just an overreaction on the news?
This Could Be Huge for AMD Stock
The news that sent AMD stock through the roof was the launch of several new products and the company’s potential success in the virtual reality (VR) industry.
On Monday, March 14, AMD announced that it had an 83% market share in home entertainment VR systems. That number turned out to be a big surprise. And markets liked it, because in the past, AMD has always lived in the shadow of Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA). (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.)
The keyword here is “ecosystem.” AMD has partnered with the “Oculus Rift” and “HTC Vive Pre” headset manufacturers to “make sure the Radeon ecosystem is ready to take advantage of their hugely anticipated launches this year.” (Source: Ibid.)
Going forward, the company is going to release several new products that could further solidify its position in the virtual reality business.
AMD demonstrated the power of its forthcoming “Polaris 10” graphics processing unit (GPU) at the 2016 Game Developer Conference this week. The Polaris GPU architecture is optimized for DirectX 12 and virtual reality and would be ideal for gaming with VR headsets.
Also boosting AMD stock’s appeal is the company’s “LiquidVR” technology, which is now being used by headset manufacturers, content creators, and game engine developers. LiquidVR technology can help “address obstacles in content, comfort and compatibility that together take the industry a step closer to true, life-like presence in VR games, applications and experiences.” (Source: Ibid.)
Note that AMD is not just focusing on virtual reality. Earlier this month, the chipmaker announced two 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.)
Both of these chips are super fast but also more energy-efficient. In fact, the new AMD A10-7890K is the fastest AMD desktop accelerated processing unit (APU) ever released. These two products would be great for gaming and might be able to bring the company back to the main stage.
The Bottom Line on AMD Stock
Of course, although AMD has been doing quite well in the VR industry today, we shouldn’t forget that competition is getting intense. For instance, Nvidia’s upcoming Pascal products will be competing directly with AMD’s “Polaris.”
However, due to the fact that AMD has been the second place finisher for too long, the thought of it becoming the leader is good enough for investors to warm up to AMD stock again.