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Can AMD Keep Up with Nvidia in 2017?

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Dec. 30 2016, Updated 7:38 a.m. ET

AMD fell 4.3% on December 28

Advanced Micro Devices (AMD) fell 4.3% on December 28, 2016, without any apparent catalyst. In the week ended December 23, 2016, AMD rose 8.6% and in the trailing one-month period, AMD stock was up over 30%. AMD stock has seen a spectacular rise in the last year, rising 285% in the trailing 12-month period.

AMD announced its 3Q16 results in October 2016 and reported double-digit revenue growth for the first time in more than two years. It also reported its first non-GAAP[1. generally accepted accounting principles] net profit in six quarters. Its growth was driven by strong demand for semi-custom chips.

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Can Nvidia outperform AMD again?

Nvidia (NVDA) outperformed Advanced Micro Devices (AMD) with its high-end Pascal GPUs. The two companies have adopted two different strategies. While AMD focused on low-end, portable GPUs for mainstream gamers, Nvidia focused on high-end, high-performance GPUs for advanced gamers.

Nvidia dominates the PC gaming market, and AMD dominates the game console market. Despite the launch of the Polaris GPU, AMD’s revenue growth was mostly driven by seasonal demand for semi-custom chips from game console makers.

Nvidia is currently making inroads into the console market with the Nintendo win. Nvidia stated that consoles like Sony’s (SNE) PlayStation, Microsoft’s (MSFT) Xbox, and Nintendo’s Switch, as well as PCs, have the same basic architecture. This makes it easier to port games between consoles.

Nvidia dominates the GPU application in AI (artificial intelligence), and AMD is eyeing this market. AMD recently secured orders from Google (GOOG) to supply GPUs for the latter’s cloud platform.

Moreover, AMD is expected to launch a high-end Vega 10 GPU in fiscal 1Q17 that would compete with Nvidia’s high-end Pascal GPUs. However, it remains to be seen if Vega can help AMD win back share in the GPU market from Nvidia.

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