AMD is a hot stock even in a weak macro environment
Advanced Micro Devices (AMD) stock could see a new high on June 10, as the company is set to unveil its 7 nm (nanometer) Navi GPU (graphics processing unit) and talk about its ray-tracing strategy at E3 2019.
When AMD announced its 7 nm PC and server CPUs (central processing unit) at Computex 2019, its stock rose as high as 12.2%. The Navi announcement could see some high-single-digit growth.
AMD stock has risen 22.6% in the last ten days despite heated trade tensions between the US and China. At the Bank of America Merrill Lynch 2019 Global Technology Conference on June 6, AMD’s senior vice president of marketing, human resources, and investor relations, Ruth Cotter, stated that AMD had adjusted its supply chain outside China, mitigating the impact of import tariffs. Moreover, she added that AMD is focused on new product launches, which would compensate for weak economic demand, putting AMD in a sweet spot in such turbulent times.
AMD could make a new 52-week high
AMD is currently trading at $32.4, slightly higher than its 52-week high of $34.14. The last time AMD traded above $30 was in September 2018, before the trade war and the crypto bubble burst hit the stock. If AMD stock rises 7%–9% on June 10 on the Navi announcement, it could make a new 52-week high of over $35, a level last seen in February 2006. Wall Street analysts have a bullish price target of $42 for AMD.
AMD stock trended downward in the past after it lost its CPU market share to Intel due to delays in its product launches. However, AMD was reborn in 2017 with the launch of its Ryzen CPUs. Cotter stated that the new AMD is a different company with three years of product road map and strong product execution—something the old AMD lacked.
This year will see AMD transition to its next-generation CPU and GPU architecture based on TSMC’s 7 nm node. For the first time in 50 years, AMD will be ahead of Intel in terms of process technology, which will help the former gain a higher market share at a faster pace. Even when end-consumer demand is low, AMD’s revenue should grow thanks to its increased market share.