The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.



AMD Stock Outlook

Summary:

Some tech reviewers with fancy test equipment reported that AMD’s reference design Radeon RX 480 test units exceeded the 75 Watt power draw of PCI-Express Standard.

AMD acted quickly and is issuing a software fix that will limit the Radeon RX 480’s power draw from the PCI-express slot.

The more important issue is whether AMD can make enough Polaris GPUs to meet market demand.

We should never let shorts who make it their mission to find faults on AMD’s products discourage us from staying long on AMD.

AMD still has favorable buy signals from 90-day and 1-year algorithmic forecasts.

I want to make it clear that I’m dismissing the out-of-spec PCie power draw of the reference units of Radeon RX 480 as a minor issue. It is not going to affect future sales of 14-nm Polaris GPUs. A Reddit topic is full of links to tech review sites who all reported the higher-than-expected idle power consumption of Advanced Micro Devices (AMD) Radeon RX 480. Sites like PCPer used special test equipment to find out that the reference design Radeon RX 480 has exceeded the 75 watt maximum power draw from PCI-E slot set by PCI-SIG.

Bad propaganda could affect the sales of Polaris GPUs. Shorts like Tt78 (who admitted he is a liar) are exaggerating the issue to disparage AMD. AMD’s revenue growth and stock price are subject to the sales performance of its Radeon GPU products. Exaggerating the minor PCIe issue hurts the long case for AMD. I previously speculate that AMD is delaying its Zen CPU to specifically focus on Polaris products this year. Any bad or overblown news item that could affect future sales of Polaris Radeon GPU deserves a rebuttal.

AMD is steadily regaining its market share on discrete GPUs. It hurts the market share recovery and the long case for AMD if Tt78 (and other sell-side readers/writers) are allowed to abuse minor issues over PCIE-e slot power draw to declare that Polaris GPU sales are going to be seriously affected. In fact, the higher-than-75 Watt test results prompted Seeking Alpha Contributor Mark Hibben to denounce the Polaris Radeon RX 480 as an overhyped disaster. The impact of Seeking Alpha articles on online investors’ opinion is vast. AMD investors did not like the drop in its stock price after Seeking Alpha published Mark Hibben’s article criticizing the more than 75-watt power draw from PCIe slot of the Polaris Radeon RX 480.

AMD announced yesterday that it is issuing a software update that will limit the Radeon RX 480’s power draw from PCIe slot. I also expect the third-party partners of AMD like Sapphire, XFX, Asus, and MSI, to create their own versions of the RX 480 using a 150-watt 8-pin power connector so that they will not draw more than 75 watts from the PCIe slots.

It is to my understanding that the reference design video cards that got tested by Tom’s Hardware used a single 75-watt 6-pin power connector. This is likely the reason why the Radeon RX 480 had to draw more than 75 Watts power from the PCIe slot to meet the performance demand needed by Tom’s Hardware’s special benchmark tests.

My retort now is that the PCIE-e slot 75 watt max power draw limit is not a rule set in stone. Other older discrete video cards like the Asus Nvidia (NVDA) GTX-960 Strix were exceeding the 75 Watt power draw from the PCIe slot and nobody complained about burned PCIe slots/damaged motherboard. Watch the YouTube video made by AdoredTV, he explained clearly why this issue got over-exaggerated.

There are now motherboards with multiple PCI-Express slots that tolerate discrete video cards who draw more than 75 watts from PCIE slot. The truth is that multi-PCIe motherboards of today can easily handle GPUs not strictly following the 75 watt PCIE slot maximum power draw set by PCI-SIG.

AMD Did Not Lie, It Really Improved The Energy Efficiency of Polaris GPU

Hibben also argued that AMD did not improve the energy efficiency of 14-nanometer Polaris GPUs like the company promised. AnandTech’s chart below shows the RX R80 actually consumes less total load power during Crysis 3 benchmark than older AMD Radeon 390/390X video cards. AMD’s $249 Radeon RX 480 8GB version is actually more energy efficient than Nvidia’s 16-nanometer Pascal $380 GTX 1070.

Source: AnandTech

Source: AnandTech

My point is that AMD did improve power efficiency on its first generation of 14-nm Polaris video cards. Even though AMD is marketing the RX 480 as a 1080p gaming video card, Tom’s Hardware tested it on 4K resolution Metro Last Light and AMD’s first Polaris GPU was still more energy efficient than older Nvidia or Radeon video cards.

It doesn’t matter whether it’s 180% or 67% energy efficiency improvement. Marketing/advertising press releases are from overenthusiastic marketing spiel people. We might also presume that AMD’s own in-house testing did show its first Polaris GPU product has 180% energy efficiency improvement.

Hibben’s article concluded that RX 480 sales will tank due to its allegedly disappointing power consumption. Such speculation is fuel to the sell-side community. It likely led to AMD stock price dropping last Friday.

AMD Does Not Need PCI-Express Logo To Sell Polaris GPUs

Hibben also mentioned the possibility that AMD could get sued if it keeps using PCI-Express to describe Polaris GPUs. My retort is AMD supplies its Radeon GPUs to third-party brands. It is the third-party vendorwho decide to use PCI-Express logo or not. Nobody will waste time to sue AMD from using PCI-Express branding or terminology to describe its Polaris GPUs.

Furthermore, the PCI Express standard is an open source framework that even originator Intel (INTC) cannot dictate upon. PCI Express is not proprietary – bending the rules is fair game. Retailers and consumers are not going to reject the RX 480 just because it doesn’t carry the official PCIe logo. The only essential features that are important to retailers, PC OEMs, and gamers are the low price tag and excellent gaming benchmark scores of the $199 Radeon RX 480.

Final Thoughts

I’m long AMD and I tout that sales of the Radeon RX480 will NOT TANK because of the out-of-spec power draw from PCIe slot. AMD is already fixing it with a software update. Yes, a software method to limit the RX 480’s power draw could result in a throttled performance. However, third party GPU vendors will not be using reference Radeon RX 480 cards from AMD. They will come up with better modifications. I expect them to use a dual 75-watt 6-pin power connector or one 150-watt 8-pin connector so that the RX 480 could maxed out its performance capability while drawing more power from the Power Supply Unit (PSU) of the computer.

Investors should ignore the annoying noise over the fixable RX 480’s PCIE-slot power consumption. Market reality is that there’s a too-strong demand for RX 480. Some enterprising online vendors are already selling the 8GB version of the RX 480 with a $100+++ mark-up. The only thing that could endanger the sales of Polaris GPUs is a manufacturing failure or tardiness on the part of AMD.

It will be a real disaster if AMD incurs a lingering short-supply problem over retail versions of Polaris GPUs. Allowing scalpers to put $100+++ mark-ups is the big discouragement for consumers. AMD has to make sure that its mass-market approach to Radeon RX 480/470/460 is not hampered by inadequate supply.

We should trust the good buy signals that I Know First algorithm still have for AMD. The 3-month and 1-year algorithmic forecasts are still very favorable that AMD’s stock will go up beyond its current price level. Trust the artificial intelligence, deep-learning power of I Know First computers. Unlike sell-side humans, machine learning computers predict stock market trends without overblowing minor issues like PCIe slot power draw.