Advanced Micro Devices AMD added to its rapid YTD growth on Monday, reaching a 52-week high of $34.30 per share, representing YTD growth of 82.1%. AMD has been a standout, performing well above industry average and the S&P 500, as the semiconductor market has started to recover from recent hits due to the ongoing trade war with China.
AMD’s growth Monday was the result of an announcement by Microsoft MSFT that its new “Project Scarlett” Xbox console would be powered by an AMD chip. Microsoft said the new console will be 4 times more powerful than the current Xbox console, with the new AMD chip responsible for much of this progress.
Although the trade war did hit many semiconductor companies hard and the market is highly cyclical, many of the companies in the sector are expected to have significant growth in the coming years and AMD is one of those companies. AMD’s stock growth over the past 6 months has been tremendous and analysts believe the company will have increasing revenue over the next few years, which could further fuel stock growth.
Zacks Consensus Estimates for AMD’s EPS is expected to be $0.67 for fiscal 2019 and $1.04 for fiscal 2020. Those numbers represent 45.6% growth for fiscal 2019, followed by an additional 56% growth for fiscal 2020. Zacks Consensus Estimates also call for 20% revenue growth in fiscal 2020, after the 6% revenue growth projected for this year.
Analysts have been optimistic about AMD’s long-term earnings prospects. The company has received 6 upward revisions in the past 60 days for its 2020 earnings estimates compared to just 2 downward revisions. This shows that at least some analysts are more optimistic about the future earnings of AMD, and increased earnings may fuel stock prices.
Overall, it seems that AMD has the potential to continue growing. It is currently a Zacks Rank #3 (Hold), but given EPS and revenue estimates, along with recent analyst revisions for future earnings, AMD has many positive signs for future growth and could potentially make a good addition to a portfolio.
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