Categories Analysis, Technology

Will AMD stock continue to rally amid competition worries?

Advanced Micro Devices (NASDAQ: AMD) stock has risen over 73% in the year so far as the demands for chips are on the surge from many PC makers. In contrast, Intel Corporation (NASDAQ: INTC) has risen over 11% since this year. Till last month, the trade tariffs and weakness in the graphics channel remained the cause of concern in the industry. Will AMD stock continue to rally amid competition worries?

The shares of AMD have been rising at a cautious pace as the PC makers could change the manufacturers at any time. The chip giant Intel has been facing misfortune due to the ongoing chip shortage, which could have frustrated many PC makers. This is likely to be a boon for AMD and other chipmakers.

Will AMD stock continue to rally amid competition worries
Courtesy: AMD / Facebook post

Intel has been the market share leader for microprocessors for many years. Intel has substantially greater financial resources than AMD does and accordingly spends substantially greater amounts on marketing and research and development. Intel is expected to maintain its market position and continue to invest heavily in marketing, R&D, new manufacturing facilities, and other technology companies.

AMD has been more vulnerable to Intel’s aggressive marketing and pricing strategies for microprocessor products as Intel manufactures a significantly larger portion of its microprocessor products using more advanced process technologies. However, at the end of 2018, a CPU shortage hurt Intel heavily that is likely to ease in the third quarter of 2019.

Since the launch of AMD’s Ryzen, Threadripper, and EYPC, the company has in all fronts been slowing gaining market share, which turned fatal for Intel. Also, the delay in Intel 10-nanometer CPUs in 2018 turned beneficial for AMD.

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During the second quarter, AMD saw an increase in the demand for its Ryzen processors and datacenter GPUs as well as a higher EPYC server processor. This is likely to continue in the third quarter too as many leading PC makers including Microsoft (NASDAQ: MSFT), HP Inc. (NYSE: HPQ), and Lenovo have opted for AMD to supply chips.

Meanwhile, Intel has started focusing on a string of strategic acquisitions for establishing itself in the artificial intelligence and autonomous automotive space. Apart from this, Intel’s decision to sell 5G smartphone modem business to Apple (NASDAQ: AAPL) could remain a concern for AMD in the long-term as competition tightens.

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