The Electronic Entertainment Expo (E3), the biggest video game gathering in the world, took place last week in Los Angeles. While no official announcements were forthcoming regarding new consoles, enough was said during the event to indicate that the next console generation is coming sooner rather than later.
That could be seen as somewhat surprising, given that both Sony Corp (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT) have released enhanced versions of their consoles recently. However, those releases may be more indicative of a new trend that’s designed to help consoles stay more competitive with ever-improving PC gaming throughout their lifecycles, rather than as a means of further extending console lifecycles. If that’s the case, it wouldn’t be at all surprising to see new consoles from Sony and Microsoft by 2020.
New consoles would bode well for several companies and their shareholders, including Sony Corp (ADR) (NYSE:SNE) itself, Advanced Micro Devices, Inc. (NASDAQ:AMD), and GameStop Corp. (NYSE:GME). We’ll take a look at how these companies and their stocks will benefit from new consoles in this article.
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Reports suggest that Advanced Micro Devices, Inc. (NASDAQ:AMD) will play a huge role in the PlayStation 5’s development, with the system’s GPU being based on custom Navi architecture, while its CPU will also be handled by AMD’s Zen. While there aren’t yet as strong of ties between Microsoft’s next console and AMD, it’s certainly possibly that AMD could also assume those same dual functions for the next Xbox, as it was also the processor supplier for the Xbox One.
That’s more good news for Advanced Micro Devices, Inc. (NASDAQ:AMD), which has surged by over 60% in the past two months on the strength of huge gaming growth. In the first-quarter, revenue for AMD’s computing and graphics segment jumped by 95% thanks to Fortnite and the continued growth of social gaming and game streaming on PCs, which requires ever-more powerful processors.
30 hedge funds tracked by Insider Monkey were shareholders of AMD at the end of 2017, owning 6.4% of the company’s float. During the first-quarter, several other hedge funds took up new positions in the stock as well, including Seth Fischer’s Oasis Management (19.18 million shares), Joel Greenblatt’s Gotham Asset Management (924,045 shares), and Leon Shaulov‘s Maplelane Capital (790,000 shares).
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On the next page we’ll look at two other stocks that will benefit from the launch of next-generation video game consoles in 2020.