Its revenue will increase regardless of consumers’ preference for one console over another. This alone will boost Advanced Micro Devices, Inc. (NYSE:AMD)’s profits to sky-high levels. However, the company should continue to develop faster and more reliable processors so it does not lose contracts when updates of the consoles are developed.
In addition, AMD is developing high-end video cards and chips for computers. This division shares profits with nVidia, the other major player in the video card industry. This section provides solutions for demanding customers with high needs in video editing or gaming. On the positive side, newly developed games require higher video card capabilities. Therefore, gaming-oriented customers have to constantly upgrade their video cards, which sometimes run up to $500. I expect the demand from these customers to stay strong, since everybody loves to play a good video game every once in a while.
From the business plan point of view, the company is expanding operation margins. Even though revenue shrunk 30% to $1.0 billion in the last quarter, the net loss narrowed from $590 million to $146 million. I would recommend acquiring this stock as a growth play that will most likely be profitable for investors.
My two cents
Intel and Advanced Micro Devices, Inc. (NYSE:AMD) are trying to adapt to other markets as PC sales continue to decline. Intel Corporation (NASDAQ:INTC) is delving in the tablet and mobile markets by powering Windows 8 tablets and cellular phones. Advanced Micro Devices, Inc. (NYSE:AMD) will supply chips to the Xbox One and Playstation 4, which are likely to boost the company’s sales. Finally, Microsoft may win the console battle against the Playstation 4 by creating the ultimate multimedia console in the market. Not only is it targeted to gamers, but to non-gamer customers, too. For these reasons, I would recommend buying these stocks as a basket to create a blend of income and growth.
The article These Stocks Will Bring You Happiness (And Capital Appreciation) originally appeared on Fool.com and is written by Robinson Roacho.
Robinson Roacho has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel Corporation (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT). Robinson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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