The upcoming Ryzen launch has propelled Advanced Micro Devices, Inc. stock near to its 10-year high. Can AMD stock gain further? 

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Shares of Sunnyvale, California-based Advanced Micro Devices Inc (Nasdaq:AMD) are showing no signs of slowing down anytime soon, gaining more than 27% YTD after rising almost 296% in 2016. Of late AMD stock has been up due to the positive initial response to Ryzen CPUs and its official release date getting closer. We already discussed how AMD stock could head higher going into AMD Vega GPU preview. With AMD stock approaching its 10 year high, investors could feel the stock has run up too high. Investors would be wary of buying AMD stock at these levels with technicals also suggesting the stock has entered the overbought zone. However, AMD stock may still defy all odds and could be heading for much higher grounds. AMD stock, which was primarily driven by investor speculation in the past could see the speculations actually turning into reality in the coming days. The question now is, should you buy AMD stock near its 10-year high price?

The Ryzen Advantage.

The Sunnyvale-based chipmaker announced the global launch of AMD Ryzen 7 desktop processors on Feb 22nd with pre-orders starting the same day afternoon. Within hours of its launch on Feb 22nd, Ryzen 7 processors became Amazon’s best-selling CPUs. A Wccftech post reports The Ryzen CPUs hold the three spots out of the top 4 on Amazon’s best sellers list for CPUs. Not only CPUs also "AM4 motherboards for Ryzen processors also occupy the top 3 spots for best-selling desktop motherboards". One important point to note is that these are just pre-orders, one could imagine the kind of market disruption the official Ryzen CPU availability on March 2nd could do, in case of positive reviews from initial users. Time and again we have seen a number of benchmark leaks which have showcased how Ryzen CPUs are outperforming their Intel (Nasdaq:INTC) counterparts on all fronts, that too at much lower prices.

AMD is set to gain significant CPU market share by the end of Q2 2017 as the chipmaker even confirmed the launch time frame of their Ryzen 5 and Ryzen 3 processors, which are arriving in Q2 and second half of 2017 respectively. These processors are aimed at the mainstream and budget PC building audiences. One should note that Ryzen 5 and 3 series family also "feature the same DNA as the high-end Ryzen 7 processors but come at sweet-spot pricing". Also, the fastest 6 Core Ryzen 5 1600X  is 69% faster than i5 7600K. This gives us an idea of things to come from AMD. The speculation of AMD's Ryzen bettering Intel's offerings is almost a reality and it would see AMD making significant gains out of it. This gives more reasons for investors to cheer.

More Bullish Commentary From Chip-Stock Analysts

A recent Barrons post reports fresh bullish commentary on AMD stock. Rosenblatt Securities‘s Hans Mosesmann has a $16.50 price target for AMD and to quote him on AMD's advantage over Intel:

"The “instruction” processing centric CPU is being threatened by the “data” processing centric GPU which structurally advantages AMD as the #2 player in GPUs with the company’s new Vega architecture. More importantly for the shares is the re-emergence of AMD in mainstream and high-end x86 CPUs particularly in servers given Intel’s near 100% share. AMD’s new Zen family of processors (architected by highly acclaimed CPU architect Jim Keller), is set to gain share in mid-to-high end server sockets as datacenter players are keen on an alternative source that likely will not sell them “up” every year, and with features that Intel may not offer such as 8 memory channels (DRAM)"

MKM Partners‘s Ruben Roy assigns AMD stock a neutral rating and considers the sale of Ryzen processors “could be an inflection point”. However, he is reluctant to recommend AMD stock currently due to its valuation though he states "there is a lot to like about AMD’s resurgence". A Seeking Alpha post puts the stock price target of AMD as high as $25 by the end of 2017. The author of the post sites the "calendar of events" lined up for AMD as the primary driver for AMD stock. One important thing to note from the above post is that AMD stock has gained immensely on Ryzen and Vega product speculation and launch, a similar thing can be on the card when the Naples Zen server CPU is launched in Q2 (tentative launch time). The $25 price target seems too far-fetched for now but all these factors still do suggest that AMD stock rally is far from over. A fellow Amigobulls contributor also had written about the $25 price target for AMD.

How Long Will AMD's Competitive Advantage Last?

Many were not confident on AMD's chances to field a product that could give Intel a run for its money but that has changed with the Ryzen launch. As a Fudzilla post states "it is naive not to expect that AMD Ryzen won’t lose some benchmarks to Intel, but with great pricing and positioning, AMD is kickstarting its way back to the market." Intel could compete with AMD by reducing its prices and there are question marks over whether AMD can compete with Intel in the long run. For now, AMD is all set to gain market share as Intel has failed to move to 10nm chips in time, and is not offering any incremental gains in its new generation of chips continuing its "tick-tock" philosophy. This Seeking Alpha post reaffirms the belief that AMD could keep Intel at bay for a much longer time. The investigation of the post's author reveals that "there’s a reasonable path to 7nm volume production at Global Foundries, implying 7nm AMD chips in 1H’19 or 2H’19. This would surpass Intel’s timeline, and keep AMD competitive, as it introduces stop-gap technologies to keep Zen architecture relevant up until 2020." This makes one believe that the competitiveness of AMD's product line-up may not be as short-lived as the AMD bears would like you to believe.

Putting It All Together.

All the latest developments do point that AMD's turnaround is not all hype and speculation. The upcoming product market launches would definitely boost AMD's revenues and profits. The initial response looks very promising. With Vega and Naples launches still in the pipeline, AMD stock has a lot of tailwinds and growth catalysts going for it. To go long on AMD stock near its 10-year high price levels could be a risky play but it may turn out to be a rewarding one as well. If the company continues to deliver promising products in line with the hype and speculation, then AMD stock rally is set to continue.