Advanced Micro Devices, Inc. (NASDAQ: AMD) is having a relatively strong start to the trading session today. With a strong position to win market share in the gaming and cloud servers market, it's understandable. However, the real value proposition may be just around the corner. Before we get into that, we'd like to give special thanks to our partners at Trade Ideas for alerting us to the movement. At the moment (10:14), AMD is trading at $11.94 per share after a gain of $0.51 per share (4.41%) thus far today.
Is A Bidding War Involving AMD On The Horizon?
There's no doubt that AMD is in a good position at the moment. With a strong product offering, the company's chips have been chosen by Alienware, breaking it into the top-of-the-line gaming industry. That's a very high-dollar industry as well. On top of that, the company is also well-positioned to take a good chunk of the cloud server market share, which is also a high-dollar market. In fact, with growing interest surrounding artificial intelligence in cloud computing, demand for high-end chips for this arena is soaring. However, these are just the tip of the iceberg. The real value proposition is a potential takeover.
Is AMD Setting Up For A Bidding War?
As mentioned above, AMD is in a great spot when it comes to gaming and cloud computing. These are two areas where not only is money being made now, but growth in these industries is expected to be exponential!
Considering the above, take a look at the company's market cap. At the moment, Advanced Micro Devices has a market cap of around $11.9 billion. While that's a relatively large market capitalization, in the world of technology, it's actually not so big. Think about companies like Intel, Google, Apple, and other behemoths in the tech industry; most of them could easily take the company over.
Perhaps more importantly, there's a good reason for a takeover to happen. With expectations of exceptional growth in the industry, there's no doubt that big tech has a keen focus on both gaming and cloud computing - the two areas where AMD seems poised to excel. If any of the larger tech companies plan on taking a chunk of market share in these areas, they could purchase AMD for a head start. As a result, the company may be a prime target for many, which could set a bidding war into place relatively soon.
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on AMD. In particular, we're interested in following the company's work in both the cloud computing and gaming arenas, as the momentum is starting to build. Considering the timing, we're also interested in watching to see if a takeover bidding war takes place any time soon. At the end of the day, now would be the time for big tech to move in. After all, if they wait until AMD commands the industries it is tackling, well, the cost of a takeover could be exponentially higher. Nonetheless, we'll continue to follow the story closely and bring the news to you as it breaks.
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