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AMD Ups the Ante in Gaming With New Product Launches at E3

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Advanced Micro Devices’s AMD CEO and president Dr. Lisa Su made a slew of announcements at the “Next Horizon Gaming” livestream event at Electronic Entertainment Expo (E3) 2019.

The company introduced promising features for gamers in computing, PC gaming and visualization technologies based on its new Radeon RX 5700 graphics card and third generation AMD Ryzen desktop processor.

AMD’s new Radeon RX 5700-series and RX 5700 XT graphics cards are ideal for gamers who require superior graphic performance. RX 5700 series mobile processors, which are developed on Zen 3 core architecture, feature high-speed GDDR6 memory. These processors are designed to support the PCIe 4.0 interface and deliver superior 1440p gaming experiences. This in turn will provide enhanced computing experience and cater to greater workloads and architectures.

Powered by the latest “RDNA” architecture, the graphics card will support AAA, eSports and Virtual Reality (VR) titles, giving it the desired speed for optimal graphics solutions required for notebooks and desktops. These graphics cards are designed to aid future of PC, console, and cloud gaming.

With these cards, AMD is foraying into the high-end graphics card market. Consequently, AMD’s revenues are poised to benefit significantly if the latest GPU can cater to the rising demand of users.

The latest third generation AMD Ryzen Threadripper 9 3950X processor features 32 threads and 16 cores. These processors are anticipated to launch on Jul 7, 2019.

Higher core counts of Threadrippers are expected to bolster the competitive position of AMD against Intel INTC in the high-end desktop market (HEDT) considerably.

Further, the company’s move to improve its processor portfolio strengthens its competitive position against the likes of NVIDIA NVDA.

Xbox Game Pass for PC

AMD also rolled out the latest Xbox Game Pass to PC gamers, by which the players will be able to access more than 100 PC games for three-months with the purchases of selected products of AMD. We believe the extension of Xbox Game Pass to PCs will enable AMD to strengthen competitive position against Microsoft MSFT.

Share Price

AMD is likely to gain traction in the console, PC and cloud gaming industry with the aforementioned positive developments, which are instilling confidence in the stock.  AMD stock has returned 109.7% in a year’s time, substantially outperforming the industry’s rally of 4.8%.

What Investor’s Need to Know

The gaming market is projected to hit $174 billion by 2021 from $134.9 billion estimated in 2018, per a report by Newzoo.

Additionally, per IDC data as revealed by DisplayDaily, worldwide market for gaming desktops, monitors and notebooks is projected to grow 8.2% on a year-over-year basis and reach 42.1 million devices shipped in 2019.

Per latest IHS Markit data, “consumer spending on cloud gaming content subscriptions reached $234 million in 2018 and is forecast to grow to $1.5 billion by 2023.”

Notably, growth in the gaming hardware market is driving demand for graphics processors as well. Per Allied Market Research, the GPU market is anticipated to reach $157.1 billion by 2022 at a CAGR of 35.6% from 2016 to 2022.

Furthermore, increasing adoption of AI techniques and machine learning tools in industries like gaming, automotive and blockchain are primarily responsible for driving GPU demand. The company is benefiting from this demand.

We believe that the launch of the new graphics card will aid AMD increase its market share further.

Zacks Rank

AMD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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