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Why Advanced Micro Devices Stock Has Plummeted

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Oct. 4 2018, Published 9:38 a.m. ET

AMD stock corrected on October 2 and 3

Chipmaker Advanced Micro Devices (AMD) stock has fallen ~15% in the last couple of trading sessions. It came after a stunning rally this year, rising 173% despite the correction.

In a recent article, we shed light on why the stock may be close to its peak. The recent slump comes on the back of a report by BluFin Research Partners that claims that AMD’s rival Intel (INTC) could expedite the production of its next-generation 10-nanometer processor, which would allow it make smaller chips.

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AMD wants to increase its market share in the server chip market

Intel stock has risen 5.3% this month. On Tuesday, October 2, AMD came in at the bottom the S&P 500 index, and Intel was the top gainer.

AMD’s gravity-defining stock rally was partly on the assumption that AMD could benefit from Intel’s rumored shortage in chip supply.

AMD is taking on Intel in the server market. While Intel is the market leader in that segment, AMD has an insignificant market share, which the company is trying to change.

AMD’s revenue growth is expected to continue to accelerate. However, despite the recent fall, AMD’s stock valuation still factors in a good chunk of the company’s future growth.

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