Advanced Micro Devices, Inc.: Activist Investors Need Not Apply -

Advanced Micro Devices, Inc.: Activist Investors Need Not Apply

Oct 09, 2017Jeremy ParkinsonFinance0

Written by Activist Stocks

AMD’s (AMD) lack of innovations in the past 3 months is impacting its stock. So far, AMD’s stock is up 10% in 2017, while Nvidia (NVDA) -its competitor- is up 55%. Nvidia’s dedication towards the cryptocurrency mining market is the reason for Nvidia’s rapid increase. So far, the cryptocurrency market is growing by a couple billion every month. Investors are planning to profit from this by pouring their money into microchip stocks like AMD and Nvidia, the supplier of mining chips for building cryptocurrency mining rigs.

StockSnap / Pixabay

Investors have speculated about a huge change in production in these microchip stocks; they got it with Nvidia, yet AMD hasn’t followed up. This is a big reason that investors are dumping AMD’s stock. AMD make a comeback? With just a $12 billion market cap, it certainly has the potential.

Still, we’re betting that AMD can make a comeback? With just a $12 billion market cap, it might be getting overlooked.

Let’s begin with the AMD’s Vega hype.

In late July 2017, AMD’s advertisements for their new chip Vega led investors to an investing frenzy. The investors were hoping for competition towards the crypto mining chip market -in particular, Nvidia’s 1080TI- instead they got an above average gaming chip. The point is, the Vega isn’t a bad chip, actually, it’s a well-above-average graphics card for gamers, yet it isn’t what investors had in mind as competition towards Nvidia’s 1080TI. The power consumption is higher than expected and the price is higher compared to other graphics card within the same range.

Investors weren’t happy.

The underperformance of Vega caused the AMD stock to plummet by over 20% in early August. Some investors called Vega a watered-down above-average gaming graphics card with high power consumption rates. This is excluding the high price-point of $499; investors felt lied to about the original pricing. AMD’s original marketing plan led investors to the belief that Vega was cheaper than Nvidia’s 1080 TI. Overall what they got, was an expensive, above-average gaming CPU. Nonetheless, this could have created a buying opportunity, as AMD has been changing the conversation.