This year is shaping up to be an annus mirabilis for graphic cards and CPU-maker Advanced Micro Devices, Inc. ( AMD ) and its investors.

AMD endured a tough three-year period that saw AMD stock cut in half after an anemic PC market, and stiff competition from Nvidia Corporation ( NVDA ) in the GPU business saw the company string double-digit revenue declines for years.

But the stock has been on a tear lately, gaining more than 50% year-to-date and more than 90% over the past year. AMD has several positive developments to thank for its turnaround in fortunes.

The first catalyst emerged during AMD’s first-quarter earnings call, when the company announced that it had clinched a $273M licensing deal with a Chinese consortium to jointly develop system-on-chips targeted at the Chinese market. AMD could realize substantial royalties in the future from chips manufactured using its technology.

But that’s just part of what’s going right at AMD. Let’s have a look at the other major catalysts.

Coming up Next, AMD Polaris Cards

AMD has announced at Computex that it will launch the first graphic cards based on Polaris architecture around mid-July. AMD says Polaris cards will offer the most significant performance per watt improvement in its Radeon lineup.

Polaris GPUs will be manufactured using GlobalFoundries’ 14nm FinFET process and will offer twice the performance of AMD’s current Radeon GPUs. Polaris cards will also be 1.4x more energy efficient than Nvidia’s mid-range GTX 950 cards.

The first Polaris card, Radeon RX 480, will offer more than 5 Teraflops of compute power, have virtual reality capabilities, but retail for only $199. Now that’s dirt cheap for so much compute capability and is a move directly aimed at stealing GPU market share from Nvidia.

In comparison, Nvidia’s GeForce GTX 1080 retails for $599 while the 1070 goes for $379. The only GPU that currently retails in that range is AMD’s R9 380, although the RX 480 offers 40% better performance.

AMD’s arch-rival, Nvidia, recently launched Pascal-based cards, which also appear to have pretty impressive specs. But at such a low price point, AMD appears poised to claw back significant market share from Nvidia in the mid-range GPU segment.

And that’s very significant for AMD stock. AMD and Nvidia stocks largely trade on the strength of their graphic cards offerings. Nvidia has enjoyed the upperhand in this battle over the last two years, managing to progressively win GPU market share from AMD. Consequently, Nvidia shares have almost doubled over that timeframe.

There are some early hints that AMD could be making good progress in the GPU market. The company reported double-digit sequential growth in desktop GPUs during the last quarter, and guided for 15% sequential growth for the segment in the current quarter.

VR-Capable Gaming Consoles

AMD supplies APUs (integrated CPU/GPUs) that power the Xbox One from Microsoft Corporation ( MSFT ) and the PlayStation 4 from Sony Corp (ADR) ( SNE) .

But a slowdown in console sales over the past year has been hurting the company, as the hardcore gamers have already upgraded and a dearth of blockbuster games kept the mainstream crowd from dipping in their wallets. Indeed, AMD reported a slowdown in its console processor sales in the enterprise, embedded and semi-custom segment.

During the last quarter, the segment posted a jaw-dropping 25% revenue decline due to what the company termed as low semi-custom sales (read: low console sales). Microsoft and Sony released their latest consoles a couple of years ago. Without product refreshes, sales tend to take a south-bound journey.

But the beleaguered segment could finally get a much-needed lease on life with both companies set to release new consoles. Microsoft plans to launch a smaller and cheaper VR-capable Xbox One this year with a more powerful model due in 2017. Meanwhile Sony is reportedly preparing to launch a revamped PS4 that will support 4k gaming later this year.

AMD is likely to not only realize higher ASPs from the more powerful consoles, but higher sales, as gamers rush to replace their jaded consoles.

Licensing Deal With Intel

There are rumors that Intel Corporation ( INTC ) might dump Nvidia for AMD when its current licensing deal with Nvidia expires later this year. Intel has indicated that it might use AMD’s FreeSync Standard for variable refresh monitors instead of Nvidia’s G-Sync.

Intel and Nvidia signed a five-year GPU technology licensing deal in 2011 worth $1.5 billion in 2011 after spending years in court fighting each other over patent licenses. Intel might now cut a new deal with AMD instead. AMD and Intel have lately cozied up to each other with the two companies collaborating on the Razer project.

The Bottom Line

AMD is certainly not completely out of the woods yet, but this is perhaps the closest it has been in years. The company’s second-quarter guidance pointed to a small, but significant 1.6% year-over-year top line growth that will mark the first time the company returns to positive growth territory in years.

Investors, however, are still wary of AMD stock.

The extremely aggressive pricing of its new cards has not gone down well with shareholders who fear that margins might be hurt, and AMD stock dipped 4% as a result.

AMD stock is still down close to 50% from its 2012 highs. There could be some good gains to be made in the stock as the company continues on the road to recovery.

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