Is Advanced Micro Devices, Inc. Stock A Buy Ahead Of Ryzen Launch?

Given the rapid growth the data center market is poised to experience over the coming years, AMD seems to have been perfect with the timing of its Naples server CPU. As per a recent JLL report, the data center market is set to double in size over the next 5 years. The upcoming launch in Q2 2017 will position the company to gain market share in this rapidly growing market. The impact on overall business will be significant, given that AMD has been absent from this market so far. AMD's presence in the OpenCAPI project, a consortium of tech companies including Alphabet (NASDAQ:GOOGL), International Business Machines (NYSE:IBM), NVIDIA (NASDAQ:NVDA) and others to enhance data center computing should help the company's aspirations in the server market. According to VentureBeat, "companies will be able to build products that meet the specs by joining the consortium or by getting a license from the group."

The gains will be accompanied by higher margins

The Ryzen launch will also positively impact AMD's profit margins. AMD unveiled the pricing of its Ryzen 7 series CPUs last week. The pricing for the 3 models was more or less in line with expectations, which were based on previous leaks. In a recent Seeking Alpha post, the author points out that the leaked prices for the Ryzen 3 (lowest range of Ryzen CPUs) are probably too high to take away any meaningful share at the lower end of the market. While the final pricing could tell a different tale (in case it differs meaningfully from expectations), what if AMD isn't even targeting the lower end? Why? Well, the budget PC segment is stalling, even as high end PCs continue to see growth. Quoting from a recent PCWorld post: "As the overall PC market shrinks, mobile devices have replaced low-cost PCs for many users. Those who are looking for a new PC more often than not are interested in a high-quality machine; buyers of low-cost PCs are currently in the minority."

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Disclosure: Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a ...

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