AMD shares have seen stellar gains since the company reported strong fiscal first quarter results last week, but there are reasons to think it can appreciate even more.
Advanced Micro Devices (AMD) has brought new life to the term comeback kid.
Shares of the chipmaker have climbed more than 30% in the days since AMD reported stronger-than-expected fourth-quarter results last Wednesday. That's on top of experiencing nearly 300% growth in 2016 -- a sharp increase from when the stock traded at $2.87 in 2015.
AMD stock jumped more than 11% alone on Monday, but was pulling back 3.0% to $13.29 on Tuesday mid-day.
The Street's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, pointed to the company's 15.4% revenue growth last quarter as evidence for why the stock could go even higher on CNBC's "Mad Money" segment Monday. And back in December, Cramer highlighted AMD as one of 2017's top 10 takeover targets, citing Micron Technology (MU) as an ideal acquirer. Meanwhile, RealMoney chartist Bruce Kamich says a slight pullback might be a good opportunity to buy more AMD stock.
The company's turnaround story is largely attributed to CEO Lisa Su, who assumed her role in 2014, and has since streamlined AMD's product pipeline and cleaned up its balance sheet. Much of investors' enthusiasm about the company comes from the slate of product launches planned for the first half of this year, including AMD's Zen data center server processors, Vega graphics processing units (GPUs) and Ryzen desktop processors.
"I'm very focused on ensuring that we execute our product roadmap really, really well," Su said on the company's earnings call. "And so, this year, it's about our product launches making sure that we have the right software investments and go-to-market."
Su reiterated on the earnings call that while the company is aggressively ramping new product launches, the company's expenses won't rise faster than revenue this year.
AMD has wisely pivoted away from the sluggish PC market and into the data center and virtual reality chip markets, giving it a competitive edge against rivals Intel (INTC) and Nvidia (NVDA) in high-end markets. However, Intel's controlling share of the PC microprocessor market, as well as its pricing power, still pose risks to AMD, according to several analysts.
By Annie PalmerSource: https://www.thestreet.com/story/13993073/1/why-advanced-micro-devices-still-has-room-to-run-higher.html
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