Investing in AMD: What to consider

Despite existing for nearly 50 years, semiconductor giant Advanced Micro Dynamics (AMD) is not a market leader in its two main manufacturing categories: CPUs and GPUs. The general notion towards the company is that is offers products with slightly lower performance at significantly lower prices. After struggling for several years, AMD stock price quadrupled in 2016.

On the GPU front, AMD’s main rival is NVIDIA, which is considered the market leader. However, while NVIDIA has a firm grasp on the high-end market, AMD presents significant competition due to its superior performance-to-price ratio, which is alluring to those who wish to build high-performance gaming PCs on a budget.

On the CPU front its main rival is Intel, which holds a market share of nearly 95% in chips for desktops, laptops and servers. While this could be seen as a drawback, it mainly means that with each small increase in market share, AMD’s revenues could increase dramatically. For example, it is estimated that if AMD captures 5% of the three aforementioned markets, its revenue could increase by $1.5 billion. The gap between the performance of the rivaling companies’ chips is narrowing increasingly, while prices remain much lower on AMD’s end.