Advanced Micro Devices Inc. (NASDAQ:AMD) has long been deemed “the little guy” in a world dominated by a long-standing duopoly in the chip-production business, with the focus almost exclusively placed on market leaders Intel Corporation (NASDAQ:INTC) and NVidia Corporation (NASDAQ:NVDA) by most market experts for some time.
Since the beginning of 2016, however, AMD has stepped onto the field and performed quite well, seeing a more than 375% increase over this time in its valuation to a market capitalization of more than $10 billion today, despite a one-day drop of 20% in the company’s stock price on Tuesday after the company announced earnings.
After market close on Monday, the company reported earnings and margins that largely disappointed investors, with the stock trading more than 20% lower intra-day on Tuesday as investors digested the news.
Margins were the big story with AMD, as investor expectations were tempered as the release of the new highly-touted Ryzen chips were expected to provide a bigger boost than what was released. Earnings guidance for Q2 was also revised downward, prompting analysts at Oppenheimer to express doubts over the company’s ability to grow its gross margin over time and secure large enough market share gains against industry-leaders NVidia and Intel to maintain sustainable profits over the long-term.
It’s certainly a “David and Goliath” story, and one which looks to heat up in the coming quarters as AMD works toward finding a sustainable way to challenge the incumbent players for market share.
Tech Insider
