Will Advanced Micro Devices, Inc (AMD) Stock Continue Its Rally Into 2017?

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Putting It All Together

AMD unveiled its machine learning strategy last week before following it up with the launch of the Zen based CPUs. The new Radeon Instinct GPUs and the latest Zen CPUs could help AMD pitch itself as an end to end provider of hardware required for AI focused high-performance and heterogeneous computing. Given the current growth trajectory of the AI market, it’s not surprising that many analysts are bullish about the prospects of AMD. The recent product launches could provide AMD with new revenue streams from the AI focused cloud computing (data center) market.

Trading at 2.3x TTM (Trailing twelve months) sales compared to NVIDIAs PS ratio of 9.2X and Intel’s 3X sales multiple, it’s understandable why many analysts are bullish, citing the AI market opportunity. However, AMD stock has already run far ahead of its fundamentals which means that even though realizing the implied potential might bring incremental gains, a failure of the Zen based CPUs or the Radeon Instinct GPUs could induce a sharp correction in the AMD stock price. Hence, only investors with a high-risk tolerance should consider AMD at this point. More conservative investors can turn their attention to NVIDIA in order to play the AI market growth.

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Additional Links

(1) http://thefly.com/landingPageNews.php?id=2479594&headline=AMD;NVDA;INTC-AMD-upgraded-to-Buy-on-deep-learning-and-AI-opportunity-at-Mizuho&ref=il

(2) https://www.top500.org/news/market-for-artificial-intelligence-projected-to-hit-36-billion-by-2025/?ref=il

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