Can the AMD stock go back into a bull race? – The madman

Advanced micro systems (NASDAQ: AMD) stocks tumbled last month, with investors likely wondering if it could support its recovery against the downwind and rising competition. The chip maker has made a lot of money from cryptocurrency, but this catalyst is poised to become competitive. NVIDIA (NASDAQ: NVDA) has launched a new generation of graphics chips to recover its lost market share.

Nevertheless, it will not be surprising to see AMD steer investors in its favor when it publishes its third quarter results on Oct. 24, as it still has some things to look for.

AMD may have a blow in the arm …

It would appear that AMD has deliberately kept Wall Street's expectations down, while publishing its second-quarter results of the previous year, in July. The company's forecast was for annual revenue growth of only 7% in the quarter ending in September, which investors have become accustomed to in recent quarters.

AMD attributes this slowdown to the weakness of GPU sales in the cryptocurrency market, but recent developments indicate that it could easily exceed expectations. Indeed, the company has a strong sales momentum in different sectors, including GPUs (graphics processing units).

For example, its share of the GPU market increased to 36.1% in the June quarter, compared to 30.3% for the same period last year. It is also likely that AMD's GPU market share also increased in the third quarter, as NVIDIA supporters refrained from buying new cards, as it plans to launch its next-generation chips. here the end of September.

In addition, AMD seems ready to make a bigger drop in the market for computer processors and servers (CPUs) thanks to Intelof (NASDAQ: INTC) supply constraints. A shortage of Intel processors will push OEMs (OEMs) to AMD's offerings. Unsurprisingly, the Fubon research firm believes that HP will use AMD processors on 30 percent of its consumer PC line, while Dell will deploy it on more commercial PCs.

AMD is also witnessing a similar resurgence in the server processor market. Reports suggest that Intel has been forced to cut prices on its Xeon server processors in response to AMD's growing demand for EPYC chips. In fact, the market share of AMD's servers would have reached 1% for the first time in four years in the second quarter of 2018 and, according to rumors of falling Intel prices, it is likely that gains in shares of market continued in the third quarter.

As such, AMD has the potential to exceed Wall Street expectations when its third quarter results are released. However, investors will look closely at the outlook to see if the company's catalysts are strong enough to further improve its growth rate.

… but can it maintain the momentum?

AMD has done well to enter the GPU market by putting NVIDIA in the background, but it should make a comeback with its new products. In addition, AMD admitted that "the decline in GPU product sales in the blockchain market" has begun to weigh on its business.

Both of these factors can dampen the business of AMD's graphics processors over the coming quarters, primarily because NVIDIA's main rivalry is now better able to meet gaming demand. As it stands, the latest NVIDIA graphics cards are already on sale. At the same time, AMD's next-generation graphics chips based on a 7-nanometer manufacturing process are expected by the end of the year.

This means that AMD is going to miss a good year 's season when GPU resellers start stocking new products in anticipation of the end – of – year holidays. Of course, AMD seems well placed to gain more market share in PC servers and processors, but it is unlikely that they will pull enough strings to compensate for the potential weakness of graphics cards.

Indeed, the company has clearly blamed weak GPU sales for single-digit revenue growth in the third quarter, indicating that it needed to sell more graphics cards to give a significant boost to sales. its turnover. But if that was not the case, AMD's prospects could be disappointing again and this will not sound good for investors.

Harsh Chauhan has no position in the mentioned actions. The Motley Fool owns shares and recommends Nvidia. Motley Fool has a disclosure policy.