Advanced Micro Devices Inc. (NASDAQ: AMD) A Threat To Intel?

Advanced Micro Devices, Inc. (NASDAQ: AMD) has been on a remarkable run, and its stock posted a 50% gain over the past three months, as of March 3, 2017. Additionally, it’s up 14.90% YTD and 429.67% over the past year.

Here’s a look at AMD’s performance:

Source: TradingView

Although AMD has a market cap of just over $11B, while Intel Corporation (NASDAQ: INTC) has a market cap of $170B, it looks as if AMD could take some market share from Intel in this space. INTC has been significantly underperforming AMD, and INTC is down 0.30% YTD, yet up just over 20% over the past year.

Now, AMD’s recent move could be attributed to the anticipation of the company’s release of its Ryzen desktop processor line, primarily targeting the those who need high-performance computing, in early March 2017.

With that in mind, the new Ryzen desktop processor line was primarily designed for the tech-savvy who want to customize performance that fits their needs. According to AMD, “Every AMD Ryzen processor is multiplier-unlocked from the factory, so you can personalize performance to your taste. AMD provides the AMD Ryzen Master utility to access this powerful advantage.”  

With Advanced Micro Devices’ new product line, it offers consumers a more cost-effective alternative to suit their computing needs. AMD is now competing with Intel, but the Ryzen chips offer better performance and prices than Intel Core i7 processors. All Ryzen chips have 8 cores and 16 threads, and there are three tiers of AMD’s new product line: Ryzen 7 1800X running at 3.6 GHz or up to 4.0 GHz for $499, Ryzen 7 1700X running at 3.4 GHz or up to 3.8 GHz for $399, and Ryzen 7 1700 running at 3.0 GHz or up to 3.7 GHz for $329.

Intel is Responding to AMD’s New Processors

AMD’s new chipsets are not only faster and outperform Intel’s best processors, the Ryzen processors cost a lot less. Moreover, the AMD Ryzen 7 1800X broke the world record and scored 2449 Cinebench points in multi-threaded tests, while the previous world record was 2410 Cinebench points on an eight core processor.

Here’s Ryzen’s processor lineup:

Source: WCCFTech

Here’s a look at AMD’s Ryzen processors matched up against Intel Core i7 processors:

Source: PCWorld

There were some negative reviews for the Ryzen chips. According to some users, AMD Ryzen 7 has a high degree of computing power, and it would be great for many consumers…just not those using it for extreme gaming purposes.

Although Ryzen may not be great for gaming purposes yet, Intel is feeling the pressure. You could purchase Intel Core i7-6850K for $550, from Micro Center, down from $700. Moreover, the price of the Intel Core i7-6800K fell by $140. Intel is slashing prices to compete with AMD now, and AMD’s processors could take some market share.

Here’s a look at the market share between AMD and Intel:

Source: CPU Benchmark

AMD’s new innovative processor offers consumers a cost-effective alternative that has eight cores and 16 threads, which may be needed for high-performance computing. That being said, the tides can change, and AMD could grow its market share with the Ryzen 7 processors. According to Tom’s Hardware, AMD Ryzen processors sold out on Amazon.com, on March 2, 2017, and some other retailers have also sold out of these products. With that in mind, the demand for the product is there.

Although the Ryzen 7 may not be great for gaming now…AMD looks to improve the processors for gaming within the coming weeks. When speaking on AMD Ryzen’s video game performance, AMD CEO Dr. Lisa Su looked to ease investors’ fears by stating, “If you look at Ryzen, what we’re doing with actually the high end, we’re putting an eight core processor out there, where today most games actually use only four cores. And so there is some software tuning that needs to be doneWe do really, really well for content creation and anybody who likes to run videos or edit videos and high performance games. There’s some older titles that we’re working with to optimize software. We expect in a matter of weeks and months, we’ll get significant improvements.”

Additionally, AMD CEO stated, “PC gaming is a great  way to reach millions of people.” Moreover Dr. Su indicated AMD would continue to run performance tests in an attempt to make sure the Ryzen processors would meet or beat the company’s competition.

AMD Spokesperson and Worldwide Marketing Vice President John Taylor stated, “There are a few gaming oriented sites that have expressed some disappointment over gaming performance at low resolution. This is a matter of optimization by those games on Ryzen. The CPU performance shines through strongly in every CPU test reviewers have run.”

Can Advanced Micro Devices Succeed?

There are some mixed reviews on the Ryzen line, but these processors were sold out in some retailers. AMD has come out swinging in the fight for market share between Intel, and the Ryzen line could allow AMD to take some market share from intel. AMD’s new Ryzen 7 processors are cost efficient and offer eight cores, while Intel Core i7 processors are more expensive and may not be as fast when it comes to certain computing tasks.

The Ryzen release forced Intel to slash its prices on the Intel Core i7 product line in order to compete with AMD. However, still at that price point, the AMD Ryzen 7 processors are better for some performance needs and won’t break the bank for many consumers. AMD is continuously working to enhance the Ryzen 7 line, after some reviewers were unsatisfied with the processor’s ability to handle some games. However, AMD CEO indicated the company would be working on this problem. Now, if this is fixed, it could draw millions of consumers to AMD.

The stock is up over 400% over the past year, and it could continue once it tweaks the performance of the Ryzen processors. Although the stock did pull back after the release, AMD CEO has eased some worries. Due to Dr. Su’s comments and confidence in the new product line, the stock is still poised to continue its rise in 2017.

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