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Advanced Micro Devices, Inc. (NASDAQ: AMD) has been a hot topic in the world of investing lately, and for good reason. After being beaten to a pulp following the release of earnings on May 1st, the stock has yet to recover. While many believe that the battle back to the top will be a long, uphill one, the truth of the matter is that the climb may not be so difficult. At the end of the day, whether or not AMD soars in the future is closely tied to whether or not the company can compete with Intel (NASDAQ: INTC). However, I don’t believe that there’s much of a question here. The bottom line is that there are three good reasons why AMD shouldn’t have a problem competing with INTC. Today, we’ll talk about those three reasons.
AMD Innovation Has Led To Unmatched Quality In Server Processing
Server processing chips are ultimately an Intel game. After all, the company dominates the market, taking more than 90% of it with ease. However, that may change, and it could happen quickly. You see, Advanced Micro Devices has eyed the market and decided to bring cutting edge fuel to the fire fight. That fuel is Epyc, and if the company’s claims surrounding the new chip are correct, well, the comparison is a hands down AMD win.
This Epyc chip seems to be better than anything Intel has to offer, and in a big way. First and foremost, with 45% more cores than the competitor, AMD’s Epyc chip will deliver superior performance. This, combined with 60% more input/output capacity and 122% more bandwidth memory, makes the comparison a landslide victory for AMD.
We Haven’t Even Gotten To The Best Part
While the stats are mind boggling if AMD is correct, the above isn’t even the best part. The truth is that a big piece of the equation here is total cost of ownership. Advanced Micro Devices says that their high-performance Epyc chips have the ability to help reduce the cost of owning data center servers. In fact, with high-performance single-socket chips, AMD says that their chips could reduce these costs by 30%.
While that’s a big claim, it could be massive for the company if it’s true. In fact, with stronger performance and a massive reduction of cost, Advanced Micro Devices’ Epyc chip could be a disruptive force in the data center server industry.
Ryzen Is Another Key Factor Here
Another key factor in AMD’s ability to move in on Intel’s market share is known as Ryzen. Ryzen is Advanced Micro Devices’ brand of central processing units, with Ryzen 5 series and Ryzen 7 series processing units launched in the first half of the year. These CPUs have already started to gain traction among PC builders, and will likely continue to do so.
However, what we’ve seen with Ryzen is the tip of the iceberg. While Ryzen CPUs have already led to a gain of 2% in market share for the company, there’s more coming. In fact, the company is planning on launching CPUs under the Ryzen name for the commercial market as well as for consumer laptops in the first half of next year. Considering the staggering stats surrounding the Ryzen CPUs AMD has already made available, it wouldn’t be surprising to see the company easily inch its way into more of INTC’s market-share.
Price Is A Key Factor
Finally, at the end of the day, consumers want something simple. Ultimately, they want more bang for their buck. Recently, AMD announced that it was reducing prices on the Ryzen CPU, which I believe is a genius move. At the end of the day, bringing a product to market that has better specs at a lower price than the current market leader is a no-brainer. By reducing prices, AMD is likely to attract a larger percentage of the market.
AMD is doing all the right things at the right times. With the recent earnings-based declines we saw in early May, the stock is trading at a relatively strong discount with incredible intrinsic value. At the end of the day, they may not overtake Intel for some time, but the question with regard to whether or not they can compete – and slowly take a larger and larger piece of the pie – is a very simple one to answer… YES! Why yes they can!
UPDATE – As if this article couldn’t have come at a better time, proof of just what I suggested came out this morning. HP announced a series of updates to the Omen line of gaming computers. In the update, HP announced that consumers will be able to choose between Intel’s Core i and AMD Ryzen processors. Considering the statistic differences between the two, AMD is likely going to be the more popular choice. Just another step toward AMD taking their piece of the INTC pie!
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