The article was written by Jordan Klotnick, a Financial Analyst at I Know First. He graduated from Monash University with a Bachelor’s in Business – Majoring in Marketing.

AMD Stock Forecast

Summary

Dramatic rise in the year 2016, and continued success in early 2017

Is this rise possible to continue throughout 2017?

Opportunities and threats facing the company

I Know First Algorithm Bullish Forecast for AMD

AMD background and its newest innovation

Advanced Micro Devices Inc. (AMD) operates as a semiconductor company worldwide. The company’s products include mainly x86 microprocessor as an accelerated processing unit (APU) and graphic process units (GPU). In addition, it also provides microprocessors for desktop PCs.

AMD’s stock has risen by over 400% in the year 2016 and already 23.5% from January 2, 2017, to February 27, 2017. The rise has come due to the company’s potential in growth. In the past, AMD has struggled to compete with the industry leaders Intel (INTC) in the central processing unit market and Nvidia (NVDA) in the graphics processing market.

Source: Motley fool

Microsoft announced their latest update for Xbox, set to land just in time for the 2017 holiday season. Whilst Sony has yet to respond, many industry leaders believe the new upgrade will create a consistent surge in new revenue for AMD. Further extending their current sales growth momentum.

Hence, the companies computing and graphics unit seeks an opportunity to catch up with Intel in the CPU market and NVIDIA in the GPU market. AMD’s latest 14nm Ryzen CPUs, which is expected to launch in March, provides a more powerful performance than Intel’s i7 chips. In similar fashion, AMD’s Vega chips look to be a challenge to NVIDIA’s GeForce high-end gaming GPUs. Therefore, there’s every chance AMD’s sale will be on the rise this coming year.

CEO, Lisa Su had only one vision when developing AMD’s newest chips. “We wanted to disrupt the PC market, we wanted to bring innovation, choice, and performance to as many people as possible,” she said.

Source: Techvicity

AMD is trying to break through the computing and graphics markets. The revenue combined for those two markets is $600 million. Increasing by 28% year-over-year, and 27% sequentially. Consequently, this increase comes largely due to higher GPU sales. The companies revenue has an increase of 7% on an annual basis, 0f $4.27 billion.

Opportunities for AMD’s new products

First of all, in launching products that are cheaper, perform better and newer than Intel and NVIDIA’s versions, AMD will tap into the higher-end consumer product market. In doing this, they will be one of the major competitors to Intel in the market of CPU and NVIDIA in GPU. The company is looking to “disrupt the PC market” through innovation and choice, after dominance by its arch-rival.

A tech analyst, Patrick Moorhead, believes that the benchmark tests suggest that AMD’s Ryzen 7 1800X CPU, could offer “twice the performance at half the price” as Intel’s comparable Core i7 6800K, costing $499 and $1050 respectively.

Source: Overclockersclub

Threats to their progress

One of the main threats to AMD’s success in the future is if market leader, Intel, challenge their product, with something similar. However, Intel has yet to respond to AMD’s new product, but we can only imagine it’s not far away. Experts are reporting that AMD’s products are cheaper, yet also perform better. Thus, Intel would have to make a move before AMD takes over their market.

I Know First Algorithm Bullish Forecast for AMD

I Know First currently maintains a bullish stance on AMD with a signal strength of 106.39 and predictability of 0.64 for the one year forecast.

A forecast was sent to I Know First subscribers on February 28, 2016. AMD had a signal of 19.55 and a predictability of 0.61. Most noteworthy, one year later AMD showed a 598.55% return, shown below on our forecast performance chart. This gain goes along with the I Know First bullish prediction.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized everyday and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Conclusion

The restructure and new target market for AMD will prove to be worthwhile in the future. As the company looks to go back to the basics and continue challenging the market leaders. Realizing new and quality products will establish AMD as a quality provider and a high-end consumer product. Finally, AMD shares have been given a strong 1 year bullish signal of 106.39 by I Know First’s self-learning algorithm.