Advanced Micro Devices (AMD) has had one of the roughest couple of years that a company can have and still be functional. AMD has been coming up off historic lows, currently trading around 2.70, leaving it with a meager 1.87B market cap. Intel (INTC), on the other hand, has a 104.31B market cap, making it 55 times more valuable in investors' eyes. In 2012 AMD generated 5.42B in gross revenues while Intel made 53.34B - only 10 times more than AMD! Obviously, AMD has great market share right now. This year, it is poised to take much more from competitors, on all fronts, under the leadership of new CEO Rory Read. Rory is being paid to turn AMD around and has shown great progress in doing so. Meanwhile Intel CEO Paul Otellini is to step down as CEO of Intel in May 2013, after nearly 40 years at the company.
AMD, on 3/13/13, announced the first availability of its latest offering: the New AMD A-Series APU, which offers innovative user experiences like facial login and gesture recognition. Next, the new Jaguar Kabini and Temash Quad core SoCs (planned for launch in first half of 2013) is a show of AMD's longer game - integrating CPU with the GPU while focusing on usable performance over raw power, which may have been the right decision. Kabini is aimed at a thermal design power (TPD) of 15-25W - the ultra-thin notebook markets. Apple (AAPL) will be taking a long and serious look at a 15W Kabini APU for its refresh of the MacBook Airs when they announce them later in the year. Finally, Temash dual and quad cores which will be offered in 3-5.9W TPD will target hybrid-performance / low power usage tablet designs. These processors will, without a doubt, take market share from competitors.
Nintendo (NTDOY.PK) WiiU, already launched, incorporates a custom AMD Radeon HD GPU, Nintendo's first HD unit. It is easy to assume that the upcoming Sony (SNE) PlayStation 4 has the potential to sell between 70 and 110 million units over the next several years (as of November 4, 2012, 70 million PlayStation 3s have been sold worldwide). The new PC-like configuration will include a 8-core 64-bit x86 Jaguar CPU and a next-gen 1.84 TFLOPS Radeon graphics engine built by AMD. In my opinion, it's an AMD station! An existing eight-core processor from AMD retails for $130. Assuming that the x86-64 Jaguar falls within that price range, AMD could be looking at revenue of at least $9.1 billion. AMD is also providing Sony with the GPU, which could fall within the $200 range. This may provide an additional $14 billion in revenue. Rumors are that Microsoft's (MSFT) new Xbox may use AMD processors. It is rumored the Xbox 720 would pack something along the lines of AMD's Radeon 7000-series in terms of graphics. E3 2013 will be held on June 13, so not long to go before Microsoft finally unveils the system to the world. These major gaming companies can sell the console for a loss. They know if they have a high performance platform they will make up profits in software sales. Developers develop from a PC. The problem is when they target a console, they're targeting hardware an order of magnitude lower power than today's PCs, that really holds back content, which is why these companies are incorporating high powered AMD processors into their console systems.
AMD is the first to Bridge x86 and ARM Processors. The AMD Opteron processor has planned production for 2014 and will integrate the AMD SeaMicro Freedom supercomputer fabric, the industry's premier high-performance fabric. AMD will be the only processor bridging x86 and 64-bit ARM ecosystems, allowing it to break into the Intel dominated server space. AMD thinks they'll fit nicely into clouds and "mega data centers" thanks to their power efficiency, but it will let its x86-based hardware do the heavier lifting such as video encoding and rendering. This technology is the most economical, hard hitting, forward-thinking technology for servers. The AMD Opteron is a force to be reckoned with as there is no competition on this level of power, efficiency and value.
AMD is receiving upgrades from nearly all analysts. Wells Fargo (WFC) maintains an Outperform rating on AMD with a price target of $5.00 to $7.00. Advanced Micro Devices, 44 years of existence, fierce competition from all over the world and now seemingly overlooked by Wall Street, is poised to surprise. I have no doubt that under this new leadership AMD will improve profit margins, lead innovation and successfully market its premium technologies which will ultimately equate into profit for us shareholders.