AMD: $40 Next

The launch of new CPUs and GPUs from Advanced Micro Devices (NASDAQ:AMD) is giving the stock a positive boost. Even if the company reports modest profits in the upcoming quarterly earnings report on July 30, markets value stocks in the future. Robust demand for the next-generation Ryzen chips and New Navi GPUs targeting the mid-market gaming sector will lead to revenue growth.

Nvidia (NASDAQ:NVDA) tried to counter the Navi launch but AMD responded quickly by cutting prices. AMD originally thought that it would compete with Nvidia’s 2070 RTX cards but the Super GPU release changed that. Still, AMD now has a viable gaming card that offers good performance at 1440p. Pricing is competitive and the PCIe 4.0 support future-proofs the product.

On the CPU front, AMD’s Ryzen 3 CPU for $99 will put the company at the forefront of budget PCs. As unit sales grow, AMD will benefit from scale. So as component costs drop, AMD’s profit margin will improve. While it takes Intel’s (NASDAQ:INTC) market share, AMD may further convince its newly acquired customer to buy its more powerful chip. So long as consumers and businesses shift their purchasing from Intel in favor of AMD chips, AMD’s profit growth potential improves, too.

Takeaway

Markets sense AMD’s long-term growth keeps getting better. The stock recently traded above $30 and is holding that level. It is now set to get to $40 next.