Advanced Micro Devices, Inc. AMD recently launched Radeon RX 5300 graphics processing unit (”GPU”), which is designed primarily to enhance video gaming experience. following the announcement of the launch, the stock closed at $90.82, up 6.2% on Aug 31.
The graphics card will support AAA, eSports and Virtual Reality (VR) titles, giving it the desired speed for optimal graphics solutions required for desktops.
The new GPU is powered by the latest 7 nanometer (nm) Radeon DNA (RDNA) architecture, which has low latency and higher bandwidth to render video games faster.
Moreover, Radeon RX 5300 supports DirectX12 Technology, AMD FreeSync Technology, and The Vulkan API for an improved soundscape for gaming along with better graphics.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
Robust Features at a Glance
The new graphics card has 22 compute units and render output unit (ROP) of 32. It has speeds of 4.63 TFLOPs and 9.26 TFLOPs for peak single and half precision compute performances, respectively. Notably, AMD has not yet provided the pricing and availability details for the GPU.
The new Radeon processor has an effective memory speed of 14Gbps and features 3GB of advanced GDDR6 memory. The GDDR6 memory offers bandwidth of up to 168 GB/s that provides high-definition (1080p) resolution for gaming.
Markedly, it is the entry-level graphics card for 1080p gaming. The processor has PCI Express 4.0 support, which has twice the capacity of its predecessor PCI Express 3.0.
Moreover, growing preference among gamers to play at 1080p, as it provides an engaging and immersive gaming experience with high frame rates, high-fidelity graphics, and low latency, is encouraging.
These robust features are expected to drive adoption of the new Radeon GPU in the market. This, in turn, is likely to bolster AMD’s revenues in the quarters ahead and instill investors’ optimism in the stock.
In the year-to-date period, shares of AMD have rallied 98% compared with the industry’s growth of 28.5%. AMD currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Higher GPU Demand to Augment Growth
Increasing adoption of AI, augmented and virtual reality (“AR/VR”) technologies and increasing demand for gaming laptops and computers are primarily responsible for driving GPU demand.
Also, coronavirus crisis induced shelter-in-place guidelines led uptick in adoption of gaming hardware is driving demand for graphics processors as well.
Per Allied Market Research, the GPU market is anticipated to reach $200.9 billion by 2027 at a CAGR of 33.6% from 2020 to 2027.
AMD’s growing portfolio of AMD Radeon graphics cards bodes well for the company over the longer haul. AMD’s Radeon RX 5700, Radeon RX 5600 XT and Radeon VII are widely used graphics card for video games.
Moreover, the company had recently introduced Radeon Pro VII graphics card that is designed to meet the needs of visual designers and engineers. AMD is also slated to launch RDNA 2 architecture at the end of 2020.
Further, the AMD Radeon Pro MxGPU (multiuser GPU) is used by Amazon’s AMZN cloud computing division Amazon Web Service while Apple AAPL utilizes Radeon Pro 5300M and 5500M mobile GPUs features for entry level MacBook Pro 16 series.
OEMs like Dell and Hewlett-Packard use AMD Pro graphics cards in most of their mobile and desktop workstations.
We believe that the launch of the new graphics card will help AMD increase its market share further amid growth in uptake of gaming PCs. Strength in 1080p gaming capabilities and sturdy 7 nm-based architecture favor the company’s prospects in the GPU market.
Stiff Competition Remains a Woe
Although AMD’s strengthening Radeon Pro portfolio holds promise, intense competition from NVIDIA NVDA in the professional GPU market is a concern.
Notably, NVIDIA’s Quadro series GPUs with RTX technology feature real-time ray tracing, advanced shading and AI-enhanced tools. These GPUs have witnessed solid traction among mobile workstation OEMs like Acer, ASUS and Lenovo.
Further, growing uncertainty in the market due to the coronavirus pandemic could become an impediment to AMD’s growth. Also, increasing expenses on product development are expected to keep margins under pressure. Also, weakness in desktop GPU demand is a pressing concern.
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