AMDÂ (AMD, Financial) has been a laggard performer for many years, but the company has turned its fortunes around this year. While several factors have contributed to its rise, it has been the success of its Polaris architecture that propelled it to multi-year high levels. A couple of months ago, the company launched three new graphics processors specifically for mainstream users. All three cards, RX 480, RX 470 and RX 460, are priced in the range of $100 to $200.
However, the most significant is flagship RX 480, as it is able to power high-end VR headsets, comprising the Oculus Rift and HTC Vive. It can certainly be said that majority of the company’s rally is due to the launch of these GPUs.
On the other hand, virtual reality is another high growth market in which AMD, and its foremost competitor NVIDIA (NVDA, Financial), are aggressively focusing to achieve a leading position. With time, the virtual reality market is expected to grow massively. In fact, it is touted to be valued at $30 billion by 2020, as per tech M&A advisory firm Digi-Capital. As an outcome, AMD is well positioned to produce fresh revenue streams from virtual reality in the near future.
In spite of severe headwinds faced by AMD, the company is well-poised to capitalize on the growth of the virtual reality market. As a matter of fact, AMD is the first company to introduce a $200 graphics card that features virtual reality. Moreover, RX 480 and other graphics cards offered by the company are capable enough to meet the processing demands of higher-end virtual reality headsets like Oculus Rift and HTC Vive.
Apart from this, AMD is on its way to launch its new Zen PC processor in the first quarter next year. If Zen successfully meets the public expectation, it should aid the company in expanding further into the higher-end PC market, a market in which AMD lags far behind.
Final Words
AMD has pulled back considerably from its multi-year highs of $8. In fact, the stock is off 20% from those levels, and I think it is the perfect opportunity for investors who missed out on the earlier rally to buy the stock. After years of disappointment, it finally looks likes AMD has delivered on its promises. While the recent pullback may be frustrating, I think long-term investors should consider adding to their positions at these levels as AMD is about to go much higher due to its new GPUs and growing presence in the VR market.
Disclosure: No Position
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