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As the year 2013 draws to a close, it's time to get ready for next year's potential investments. Advanced Micro Devices (NYSE:AMD) has bested the fantastic return of the S&P 500 (29.15% at the time of writing this article) at 59.21%. However, questions remain as to where AMD's stock will be in 2014. This article will examine some of AMD's stock catalysts for 2014.

GlobalFoundries Wafer Supply Agreement (WSA)

As AMD investors, we have not yet received any press release regarding the Wafer Supply Agreement (WSA) with GlobalFoundries. In my opinion, however, no news is good news. According to Devinder Kumar, Senior Vice President and CFO of AMD, as stated in the Q3 2013 Earnings Call Transcript, AMD is on track toward meeting its payments in Q4 2013, and only has to pay $200 million in Q1 2014. I believe that this is great news for AMD investors as there is no uncertainty as to how AMD's inventory levels will change.

GPU Market

AMD has continued to make leaps in the professional GPU market with the introduction of the AMD FirePro D300, D500 and D700. The new Mac Pro features these GPUs, and at last check, the Mac Pro isn't available for delivery until February. AMD's professional GPU market share could hit 30% in 2014 because of the Mac Pro win, up from its current 20% market share. This will definitely improve the top line, and some of it should flow down to the bottom line.

In addition to its professional market share, demand for AMD's consumer-grade GPUs also seem to be increasing due to altcoin mining, such as the bitcoin or the litecoin. As more people start mining cryptocurrencies, they are purchasing AMD GPUs because they offer a better value than NVIDIA (NASDAQ:NVDA) GPUs. This has caused demand for the new AMD Radeon R9 series to increase. Although this may not impact the top or bottom lines too much, they will help increase market share and will increase the popularity of AMD GPUs against NVIDIA GPUs.

Micro Servers and SeaMicro

The global micro server market is expected to grow at a compounded annual growth rate of 63.76% over the period 2012-2016. The major competitors in this market include Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ) and AMD's SeaMicro. The first step in AMD's move into the micro server market was the purchase of SeaMicro, and now it has been getting wins, including the recent development of Verizon selecting AMD for its new global cloud platform. This may just be the tip of the iceberg, as stated in the AMD Q3 2013 Earnings Call Transcript by Lisa Su: "Verizon was the first major data center win that we can talk about publicly." AMD may be announcing new wins in the micro server space in the near future.

Consumer Electronics Show 2014 (CES)

AMD will be represented at the CES from January 7-10. This is a perfect opportunity to show off new products, such as the new Kaveri chip, expected to launch January 14, 2014. In addition, AMD will host a news conference on January 6, 2014 at 4 PM PST. This may be a chance for investors to get some information about micro server wins, or other product launches.

Game Console Wins

Longs and shorts alike have used Microsoft's (NASDAQ:MSFT) XBOX One and Sony's (NYSE:SNE) PS4 game console wins by AMD to their respective advantage. Game consoles should provide AMD with ample cash flow until the PC market stabilizes by 2015. Roughly 20 million next-gen consoles are expected to be sold in 2014. Note that it doesn't matter whether the PS4 sells more than the XBOX One, as AMD benefits from sales of both of the consoles. Using a $100 gross price of the APU, $2 billion will be added to AMD's top line in 2014. AMD's expected 2013 revenue is about $5.25 billion. This is a 38% revenue increase alone, on a year over year basis. Even if AMD's core Computing Solutions business declines, this is still 30%+ y-o-y revenue increase for 2014. In terms of earnings, if we assume 15% net profit margins on the gaming console wins, $300 million should flow to the bottom line. Compare this to AMD's total expected 2013 earnings of -$86 million.

Conclusion

Based on the above analysis, AMD is a great value play for 2014. After being beaten down in 2012, lifted up a little in 2013 (compared to its stock performance in 2012, not the S&P 500 in 2013), it has plenty of room to run in 2014. High short interest (days to cover is 7.39 and about 127 million shares are short) as well as the above stock catalysts makes AMD a prime stock candidate for a short squeeze. Expect upside to the $6-$8 range after Wall Street realizes that AMD is adapting to the changing PC environment by moving away from it, and into the game console and micro server spaces.

Source: Advanced Micro Devices's 2014 Stock Catalysts