Arie Goren

About the Author Arie Goren

Arie Goren is a senior global analyst at Sigma Wealth Management/ ANDBANK GROUP. He has 37 years of experience in the world financial markets specialized mostly in the American stock markets and commodities. Arie Goren has been writing many investment articles in important financial websites and financial newspapers like Seeking Alpha, Amigobulls, TalkMarkets, Born2Invest, Bizportal, Themarker, Calcalist, Globes and others. He has also developed very successful strategies for creating winning portfolios according to specific formulas. In January 2015, he was ranked among the world’s top 10 financial bloggers according to TipRanks, which holds financial experts accountable for their recommendations by disclosing their stock ratings since 2009.

Advanced Micro Devices, Inc. (AMD) Stock Has Soared on Promising Developments

In my previous articles about Advanced Micro Devices, Inc. (NASDAQ:AMD) from May 7, I suggested that the recent retreat at that time in its price could be a proper opportunity to start buying the stock. Meanwhile, promising developments for the company have caused AMD’s stock to soar again, and it is now 22% higher than when my article was written.

The most promising development for the company, in my opinion, is the fact that Apple Inc. (NASDAQ:AAPL) has decided to power its new line of iMac Pros with AMD’s Radeon Vega graphics chips. According to Apple, the new 21.5 and 27 inch iMacs are the most powerful PCs that the company has ever made. Apple expects to start shipping the new line of iMac Pros in December with an astounding price beginning at $5,000. The use of its graphics chips in Apple’s new line of iMac Pros could raise AMD’s desktop shipment volumes by a very significant amount; some market observers even calculate as much as sixty percent. As I see it, the fact that Apple chose AMD’s products for its most powerful Mac it has ever made is a tremendous significant breakthrough for AMD. Apple is well known for its searching for the best quality, and although it also looks for a good price, it is never at the expense of quality. As such, Apple’s choice, besides the promising financial benefits for AMD, it offers the company much prestige, which could open the door for AMD to other enterprises that are developing the most powerful personal computers.

In another development, on May 31, in the company’s press conference at Computex Taipei 2017,  AMD demonstrated the power of its computing and graphics products Ryzen and Radeon. The company carried out a series of product demonstrations that according to the company have never seen before, which showed high-end gaming systems from top global desktop PC producers powered by its Ryzen processor.

As I see it, the reaction of the world top PC producers to AMD’s new products has been very encouraging.

Jerry Kao, president of Acer’s IT products, said that his company prepares for continuing its partnership with AMD in order to bring together more exciting products to the market.

ASUS, known for its dedication to delivering the most innovative hardcore computers for truly devoted gamers, said that it had designed AMD’s latest 8-core Ryzen processor and a Radeon RX580 GPU to power its new powerful Republic of Gamers mobile platform.

Also, Dell said that it is excited to implement AMD’s Ryzen processor in its new Inspiron Gaming Desktop. According to Dell, AMD’s Ryzen processor offers fast responsiveness and performance for gaming, virtual reality and other computing needs at an attractive price.

HP, which is focused on delivering innovation in gaming including eSports and virtual reality, also had been excited by the recent launch of Ryzen processor and said that many users would benefit from its devices powered by the new processor.

According to Lenovo, latest AMD’s Ryzen processor give consumers the strong performance they need for the next generation of personalized computing experiences, such as virtual reality and high-quality video streaming.

Analyst Opinion

Two five stars analysts, according to TipRanks, have reiterated their Buy recommendation on AMD’s stock in the last few days. Canaccord Genuity analyst Matt Ramsay suggested a target price of $17 representing an upside of 37.3% to AMD’s stock closed price of $12.38 on June 7, while Jefferies analyst Mark Lipacis gave the stock a target price of $16 indicating an upside of 29.2%. In my view, those target prices are reasonable.

Conclusion

AMD’s stock has already soared 25.7% from its lowest value since January of $9.85 during the trading day on May 3, and there has been a good reason for that. Apple’s decision to power its new line of iMac Pros with AMD’s Radeon Vega graphics chips opens new horizons for the company, which could increase its desktop shipment volumes by a very significant amount, and could also open the door for AMD to other companies that are developing the most powerful personal computers. In my view, the reaction of Acer, Asus, Dell, HP and Lenovo to AMD’s new products has been very encouraging. All in all, due to these new developments AMD is well positioned for considerable growth, and its shares could continue to climb.

Disclaimer: The author has a long position in AAPL’s stock, and he has not any position in AMD’s stock right now. The author has no business relationship in any stock or company mentioned in this article. The author is not receiving compensation for this article except from Smarter Analyst. This article is intended for informational and entertainment use only, and should not be construed as professional investment advice.