by winston » Mon Jun 24, 2019 8:55 pm
not vested
Advanced Micro Devices (AMD)
YTD Gain: 65%
Last year, chip company Advanced Micro Devices (NASDAQ:AMD) was the best-performing S&P 500 stock. AMD is following up that record 2018 performance with another strong year in 2019.
With a 65% year-to-date gain, AMD stock is the fifth-best-performing S&P 500 stock in 2019 thus far. The driver of the out-performance? The same thing that drove out-performance in 2018: relentless market share expansion.
The global central processing unit (CPU) and graphics processing unit (GPU) markets are huge — big enough to support a $210 billion market cap for Intel (NASDAQ:INTC) on the CPU side, and a $100 billion market cap for Nvidia (NASDAQ:NVDA) on the GPU side.
AMD is a small player in this market, with a market cap just under $32 billion. But through faster-than-peer product innovation, it is rapidly winning share from Intel and Nvidia, and in so doing, becoming an increasingly large and important CPU and GPU company.
Will AMD stock stay in rally mode? In the long term, yes. The present outlook is for AMD to continue to steal market share from Nvidia and Intel over the next several years.
That share expansion, in a market supported by healthy growth drivers, should drive robust revenue and profit growth at AMD, the sum of which should drive AMD stock higher. But, in the near term, valuation friction is a problem for AMD stock, and prices well above $30 don’t seem justified just yet.
Source: Daily Trade Alert
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