Is AMD (Advanced Micro Devices) a good buy in 2014?
AMD has received a lot of attention in the past few months, especially after the surge in its shares between April and May 2013. After suffering from severe losses and falling short against the semiconductor chip industry leader, Intel, thing are working out well for the company. The increase in its share prices in April 2013 is an effort of the management and the leadership of Rory Read and Bruce Claflin. Things are looking much better and the transition of the entire business model is turning out to be promising for the company.
Are you planning to invest in AMD? If yes, this seems to be the perfect time to start investing in the company. AMD is working to increase its foothold in the mobile processor industry. Moreover, the first quarter of 2013 has been profitable in terms of desktop graphics processors and AMD has performed well in the gaming console market. The current balance sheet of the looks stable and ensures profit in near future.
Why should you invest in AMD?
- Graphic Processors Market Share: AMD devised a strategy to bundle its graphic cards with game titles and it worked for the company. The first quarter of 2013 witnessed an increase of 3% in the revenue from graphic processors. Moreover, even if the PC market is shrinking rapidly, but the company will make enough for its shareholders considering the 300 million PC shipments received every year.
- Game console market: The market share of AMD processors in game console industry helped this transition and the company made a strong comeback with its partnerships Microsoft Xbox and Sony PS3. With PS4 in the market, the company will make even better profits in the upcoming months. The company is indicating an upward growth for the past few months. The boom in its share prices in May 2013 was a result of its announcement of “hUMA” technology for the next generation gaming processors.
- New processor products (Kabini): AMD has gained some ground with its latest improved processing unit called Kabini processor released in the first quarter of 2013. These processors are designed for the low-end PC market and they offer better performance as compared with previous APUs. Kabini processors are released under E-series and A-series with better battery life. Further, the company is aiming another lower segment processor, Temash, for tablet and hybrid market. You can expect more products and better performance from the upcoming range of processors. The company is trying to enter multiple markets and succeeding as per the current results.
- New strategy for embedded market: AMD is planning to boost its sales in the embedded market. The company is planning to generate as much as 20 percent of its revenue from this market. On top of these results, we can expect even better strategies and plans in the upcoming quarters.
- Improved balance sheet: AMD has been trying to reduce its manufacturing cost for past several months and the company has succeeded in doing so. They reduced their expenses from $592 million (Q1/2012) to $491 million (Q1/2013) which indicates a solid transition in place. In addition to it, the company had net cash equivalents and marketable securities of $1.2 billion in the first quarter of 2013. The company is trying for a gross margin of 39% for 2013 and with the current process management transition; this target is easily achievable.
AMD is thriving in the console market and its target is to reduce its reliance over the decreasing PC market. We can expect a better performance from this stock and if you are planning to invest in AMD, now is a good time and watch closely for further developments.