For investors right now, it's important to understand why AMD stock has been falling, and why this dip could be a buying opportunity.
Shares of Sunnyvale, California-based Advanced Micro Devices Inc (NASDAQ:AMD) fell by close to 4% on Thursday, 12th January. The fall coincides with the emergence of rumors pertaining to the launch timelines of AMD's much anticipated products, AMD's Ryzen CPUs, which are now expected to be launched as early as Feb end, and the company's Vega architecture based GPUs, which are rumored to be scheduled for a May 2017 debut. Meanwhile, another set of rumors suggest that arch rival NVIDIA (NASDAQ:NVDA) could launch it's GTX 1080 Ti, which is expected to match the performance of its most powerful GPU Titan X, at a much lower price, as early as March 2017. Time to worry? Maybe not.
Why AMD stock fell yesterday
While some prominent voices have maintained that AMD's Vega based GPUs are likely to arrive in mid 2017, others expected these chips to be launched much earlier in the year, giving AMD a bigger lead over Nvidia's next generation Volta architecture based GPUs. Rumors which now suggest that AMD's Vega GPU line up will arrive in May this year, might have come as a disappointment to those who were expecting an earlier launch. Further, these rumors of AMD's May 2017 Vega launch have come just days after another set of rumors suggested that Nvidia could launch its GTX 1080 Ti GPU, much earlier, as early as March this year. Understandably, that might have raised some concerns. To understand how all of this will impact AMD though, let's break it down into two parts, Nvidia's GTX 1080 Ti, and Nvidia's Volta architecture based GPUs.
Nvidia's GTX 1080 Ti and how it could impact AMD
Nvidia's GeForce GTX 1080 Ti is expected to match the company's most powerful GPU, Titan X, in terms of performance, while being sold at a much lower price point. Traditionally, AMD's strategy has been to pit aggressively priced products against Nvidia to gain market share. And with Nvidia reportedly planning to compete on pricing as well, investors' concern may be that AMD could potentially have a tougher time clawing back market share. Reports suggest that the GTX 1080 Ti, which will have fewer functional CUDA cores than the Titan X, will still perform as well, coming in with computing power that's only marginally lower. According to WCCFtech, the 1080 Ti is expected to be capable of "10.8 teraflops of FP32 compute compared to the Titan X’s 11".
Also Read: How Intel could hurt Nvidia and AMD in 2017
Interestingly though, there are some industry observers like PC Gamer, who expect AMD's Vega based GPUs to outdo even Nvidia's slightly more powerful Titan X, and thereby the 1080 Ti as well by default. AMD's Vega is expected to be capable of providing 25 teraflops of FP16 compute, and 12.5 teraflops of FP32 compute, higher than both the Titan X and the 1080 Ti. Do bear in mind that AMD's Vega comes armed with High-Bandwidth-Memory 2 (HBM2), unlike Nvidia's high-end GPU we've discussed so far, which brings us to Nvidia's upcoming line up of Volta GPUs, which will be equip its high end GPUs with HBM2, to level the playing field.
Will Nvidia's Volta GPU line up come in 2017?
For those unfamiliar, HBM2 is the second generation of high-bandwidth-memory, and as Harsh Chauhan of The Motley Fool explains, "the deployment of the HBM2 should ideally help AMD's high-performance RAM to clock a higher bandwidth and consume less power at the same time as compared to NVIDIA's cards." To further explain its advantages over HBM1, here's what Patrick Moorhead, a credible voice on the tech industry, had to say on Forbes about a week ago:
"HBM2 delivers 2x the bandwidth per pin and double the capacity compared to HBM1 as well as 8x capacity/stack which just adds to Vega’s scalability capabilities."
So, essentially, the next real threat for AMD could be Nvidia's line up of HBM2 equipped high-end Volta GPUs. AMD's rumored launch of Vega GPUs in May, later than some might have expected, may have led some to believe that it would cut short AMD's lead over Nvidia's Volta GPU line up launch. It is widely anticipated that Nvidia's next generation of GPUs will be launched in late 2017. However, not everyone agrees. Take for instance, Ashraf Eassa, of The Motely Fool, who says:
"If NVIDIA follows historical patterns, if the 1080 Ti comes in March of 2017, then it could be anywhere from 10 months to 13 months before we see the first gaming-oriented Volta product (GV104). That would put the launch time frame at somewhere between January of 2018 (i.e. CES 2018) and April of 2018."
If that's correct, AMD has much more time on its hands than most people expect. Either way, given where AMD is right now, it doesn't necessarily have to make "The Best" GPUs to gain ground. What it has to do, is to make competitive GPUs that can compete in terms of performance per watt, price per watt, or any other metric, and the result is likely to be favorable for the company. And given everything we know about the Vega line up so far, AMD looks set to do that.
Summing it up
It appears as if rumors of AMD's May 2017 Vega launch disappointed some sections of the market, which might have expected the launch to happen earlier. However, as it appears, Nvidia's GTX 1080 Ti may not be as big a threat as some expect it to be. Further, with Nvidia's Volta line up due to be launched as late as next year, AMD could secure a handy lead with its HBM2 equipped high-end Vega GPUs.
As for the recent dip in AMD stock, yesterday's decline extends the fall to about 13% from the Dec 28th high of $12.42 a share. If you look at AMD's technical chart, the stock has recently fallen after hitting the upper Bollinger Band. And after yesterday's further correction, AMD's stock price is now very close to the lower Bollinger Band. Even the RSI is heading closer to 30, indicating that the stock is heading closer to oversold territory. Investors who are looking to invest in AMD could use this dip as a buying opportunity to buy into the stock. As things stand, AMD looks poised for a strong 2017.
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