Chip-making behemoth Advanced Micro Devices, Inc. (NASDAQ:AMD) has had an impressive start to the week after AMD stock soared, reaching its highest level in 13 years.
The surge was powered by the news that Microsoft (NASDAQ:MSFT) was going to use AMD’s chips its next-generation gaming console, which is being called Project Scarlett. It is supposed to be the fastest gaming console that Microsoft has ever built and is going to be powered by AMD processors. The product is going to hit the shelves at some point in 2020, but the market has already caught onto the significant opportunity it presents for AMD as a chip maker, and that is possibly the reason why the stock surged in such a way.
However, the partnership with Microsoft is not the only reason why AMD stock jumped by as much as 10% in just a week and managed to close at more than $33, a price the stock last hit in 2006. The partnership with Microsoft also proves that AMD’s processors are perfect for high-end gaming consoles and that could open up a whole new different market for the company.
Analysts are Bullish
An analyst at Wells Fargo wrote as much in a note. He stated, “While AMD’s positioning in Microsoft’s next-gen Xbox has been expected, we think this should still be considered positive as it reinforces AMD’s positioning in the high-end processor and graphics market for game consoles. (Like Play Station)”
On the other hand, an analyst at Bank of America Merrill Lynch stated that his bullish stance for AMD stock is not merely related to the Microsoft partnership. He believes the latest partnership could lead to more partnerships related to cloud streaming deals with gaming companies.
Moreover, the company also announced at a tech event that it is turbocharging its efforts to ramp up graphics chips and 7-nanometer server productions. The rollout of such a new product could also be a trigger for sustained growth.
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