Why Advanced Micro Devices, Inc. (AMD) Earnings Are Stuck in the Red

But Advanced Micro Devices, Inc. (NYSE:AMD) made it clear in its first-quarter earnings report that it’s banking the success of the coming PlayStation 4 and Xbox One to help it boost its future prospects. Analysts have started to agree, with two Wall Street analysts boosting their price estimates in just the past week. They believe that the long delay between game-console upgrades could lead to especially brisk sales of the consoles, boosting AMD’s take and potentially setting up years of recurring revenue before the next console upgrade.

Advanced Micro Devices, Inc. (NYSE:AMD) hasn’t given up on other potential avenues for growth. The company has made substantial progress in delivering on a promise to build chips based on the ARM Holdings plc (ADR) (NASDAQ:ARMH) architecture, which AMD hopes will give it better access to the data-center server market. ARM Holdings has had huge success in beating much-larger rivals like Intel Corporation (NASDAQ:INTC) to the mobile punch, so trying to ride on ARM’s coattails is a reasonable strategy for AMD to pursue.

In looking at Advanced Micro Devices, Inc. (NYSE:AMD) earnings, look beyond all the hype about gaming consoles to figure out what else the company expects to do to boost its growth. If AMD wants to avoid any gaming boost becoming a one-time improvement that quickly gives way to further losses, it needs to demonstrate its ability to become more relevant across the industry.

The article Why AMD Earnings Are Stuck in the Red originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Qualcomm.

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