Advanced Micro Devices, Inc. (NYSE:AMD) will announce its return to full server competition very soon. Epyc, the firm’s monster CPU design, will compete directly with Xeon processors from Intel Corporation (NASDAQ:INTC). We don’t know exactly how competitive the firm’s release will be, but if recent efforts are anything to go by it’s going to be an interesting few days.
AMD Server tech EPYC launches soon
Data centers have become a truly major part of the computing world, and the trend is likely to continue. If Epyc comes in right on price and features, the firm will finally be able to compete with Intel Corporation (NASDAQ:INTC) in the space. That would be an incredibly good sign for the firm, but not everybody thinks it’s likely.
AMD stock still carries a lot of risk, and it’s not likely that Wall Street traders are going to be jumping at the idea of server side chips right away. Those holding shares don’t just want bumper earnings this year. Instead, they want to see the firm perform well through the infinite time line on which they discount earnings.
AMD stock rises on Ryzen
While today’s news may be driven by server evolution, the current grand narrative about Advanced Micro Devices, Inc. (NYSE:AMD) stock covers desktop growth more than anything. The release of the firm’s Ryzen line of CPUs in recent months has caused quite the raucous among buyers.
On Thursday the firm announced a surprising exclusivity deal with Alienware. The firm, which belongs to Dell Inc. and makes high-end gaming PCs, is among the best known pre-built PC brands for gaming.
Threadripper, the most powerful Ryzen chip, will only be available in the Area 51 desktop sold by Alienware through 2017. The same chip will be available to buy off the shelf for PC building. The deal is a vote of confidence in the chip, and a decent PR opportunity.
Advanced Micro Devices, Inc. stock rises on chip hopes
All of this movement around the next gen of chips from Advanced Micro Devices, Inc. (NYSE:AMD) has caused quite a movement in AMD stock. Shares have risen by more than 120 percent over the last twelve months. Year-to-date performance has been less impressive, however. Gains since January have come in at just over 5 percent.
Now that the California concern appears to have the tech on the market those with money behind it will be waiting to see how sales go. Starting off from such a low base means that there’s sure to be a rise in total numbers. What will be more interesting is the change in margins.
Though AMD is certainly making competitive processors, it’s not clear what its long term margin is going to be on the new designs. The firm is still making mild-to-no profit most of the time.
Pacific Crest analyst Mike McConnell, in a report published on Tuesday morning, says shareholders shouldn’t look for much more. In his view shares are about fairly valued. He put an Equal Weight rating on AMD stock. The GPU boom, lead by bitcoin and Ethereum mining, is driving earnings higher right now. In the long term, however, there are sustainability questions to be answered.