AMD’s New Chips Could Spark a Turnaround for Its Stock

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It’s finally here. For the first time in three years,

Advanced Micro Devices

will be moving its processor lineup to a new chip-making process, which could enable the semiconductor company to add to recent gains against its chief rival

Intel
.

On Monday, AMD (ticker: AMD) unveiled its Ryzen 7000 series at the trade show Computex 2022. Based on a new architecture called “Zen 4,” the chips will offer a double-digit percent increase in performance versus what it now offers, AMD said.

The new products, to be available this fall, will use Taiwan Semiconductor Manufacturing’s (TSM) 5-nanometer chip-production process, marking a step forward from the current processors, which have been made on the 7nm node since 2019. Smaller-nanometer manufacturing processes have historically allowed semiconductor companies to create superior, more power-efficient chips.

AMD also unveiled a new motherboard platform called AM5 for the new processors. AM5 will support a number of new features including DDR5 and PCI Express 5.0 technologies, enabling faster memory and storage performance, respectively.

The availability of that motherboard platform should offer a boost to memory makers like Micron Technology (MU). DDR5 memory entails higher pricing and contains more advanced technology versus DDR4.

Anticipating AMD’s announcement, Bank of America analyst Vivek Arya was optimistic the company will be able to gain share across multiple product categories. On Sunday, he reiterated his Buy rating and $160 price target on the stock. “The combination of AMD design agility, management’s proven execution, roadmap consistency and strong foundry volume/cost support could help to potentially double [AMD’s] PC + Server revenue share,” he wrote.

AMD shares were up slightly to $93.71 in Monday trading.

It has been a rough year for investors in AMD as fears about a weakening PC market and a slowing global economy have hurt its share price. AMD stock is down 35% this year, compared to a 27% drop for the iShares Semiconductor ETF (ticker: SOXX), which tracks the performance of the ICE Semiconductor Index.

It comes as the chip maker is winning in the market. According to Mercury Research, AMD gained about seven percentage points of share from Intel (INTC) in the X86 processor market for the first quarter, compared with the prior year.

If that trend continues, fueled by AMD’s new lineup, it should eventually boost the stock.

Write to Tae Kim at [email protected]