shorts have nowhere to go in AMD.
1) If you can see the logic of their China strategy, and why they're commanding nearly 40% the (growing!) destop market there while being 1/40th the size of INTC, you can at least consider their strategy in this segment is working out for them. And, analysts agree the PC market is likely bottoming, so it is nice to see INTC also looking very good of recent, since its common for competitors to move together in uptrends. (Ie WMT/HD)
2) AMD has found new and longterm contracts in no less than three hot/sellout consumer devices (AAPL Mac Pro, XBOX, and PS4), which all just went on sale at the same time. Plus, AMD has won an extra, promising server deal with VZ for their new Verizon Cloud. Clearly, AMD has been rather keen on generating powerful new longterm cashflows to their business this past year, while it has fallen in price from 2012 highs of 8.25 and 2013 highs of 4.65.
3) AMD's new chip Kaveri could represent a turning point of their core business via China demand and ideal cost/performance pricepoint, even as their peripheral businesses grow rapidly. Kaveri is the result of 7 years work by AMD fully integrating their ATI technology for the first time.
4) AMD is still an easy way to get BitCoins. In fact it is one of the few techniques available in the US to quickly start mining bitcoins. LiteCoin mining creates litecoins, which carry value relative to BitCoins. AMD mines litecoins massively better than anything else, and AMD's GPU remain one of the most attainable/profitable ways to mine cryptocurrencies. LiteCoins have spent most of the entire quarter up 1500%.. since October!!. Even if this is a temporary cashflow, there's certainly a new hardware demand for AMD, and this quarter will show exactly how big. NO OTHER company offers exposure to virtual currencies so directly. And, as a sub-risk, there's a chance that it's not so temporary! (since LiteCoin ASIC's are only JUST on pre-order stage) YOU CANNOT BUY A HIGH END RADEON NOW FOR MSRP, SOLD OUT!
5) China may open the floodgates by legalizing console sales: OK, Colorado legalized weed, but this may be a bigger deal. For the first time in 12 years, 1.3B people will have access to consoles. This is a completely untapped market and there's little to indicate AMD can't make tons of cash from royalties in China. Last quarter, they pulled in 320M revenue in shipments of chips and and royalties, for PS/XBox, but the consoles weren't even on sale yet. Without China, robust console shipments could represent over $2.5B in new revenue each year. WITH China..
6) AMD following up Kaveri with an Atom-killer. AKA, AMD actually being successful in their core business beyond primarily desktops. You see, AMD has been historically very competitive against Atom, despite being behind on the process node. Oct 17, INTC delayed their 14nm process, the same day as AMD confirmed theirs. In the second link, you'll see "certain low-power products" are targeted at 14nm. Between their history beating Atom, the level playing field of 14nm, and AMD's collaboration with both ARMH and their own SeaMicro, AMD could have a huge chip for both EM/Cheap laptops (30M+ chips sold) segment AND MicroServer segment, with a lone chip. And AMD is targeting tablets too. This is a group they have previously never made a dime off, so to see this extremely capable tablet should put some fear into shorts. For being such an underdog competitor, AMD sure has many forms of computing covered.
7) Speaking of covering, AMD has gigantic short float - the kicker is, a lot of people hold this stock short. So many, that covering shares can get kinda crowded. AMD has began to swell steadily towards 52 week highs but can accelerate if bulls are strong leading AMD into earnings. Or, after earnings, AMD could rise substantially.
7-2) If short float alone isn't an upside risk by itself, it seems as though any NEW contract wins for their server products, especially as they roll out new chips for servers with and without ARMH technology, or any extension to the existing VZ contract, will be very exciting for bulls as it shows growth in a completely new angle for AMD, (or at least, one not a part of this share price) and their resurgence in the same server market which pushed AMD to $42 a share in 2006.
There seems much upside risk for shorts who last year thought they were shorting the worst performer in a shrinking industry, and are this year holding an exciting and growing small, nimble tech company with excellent revenue in a growing PC market, which also has new contracts with companies totaling $1 trillion in market cap, and direct exposure to BitCoins which gained 1000% in a year. People might think BitCoins are stupid, but no one in their right financial mind wants to be short BitCoin, which now carries a market cap of ~$11B.
If AMD bulls can avoid giving up supply to shorts ahead of earnings, there could be a short panic which is now extremely overdue.
Disclosure: I am long AMD, .
Additional disclosure: and just added to my position @ 4.25