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AMD Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of chip maker Advanced Micro Devices (NYSE: AMD  ) surged more than 13% on higher-than-average volume after reporting surprisingly strong third-quarter results. AMD also forecast fourth-quarter revenue above estimates.

So what: Revenue increased 4% year over year to $1.69 billion while adjusted profits came in at $0.15 per share, even with last year's Q3. Analysts had been calling for just $1.65 billion in revenue and $0.10 per share of earnings. AMD tempered expectations late last month when it disclosed production problems at its main supplier, GlobalFoundries.

Now what: More impressive, I'd say, is that AMD claimed to take laptop market share from its main rival, Intel (Nasdaq: INTC  ) , in forecasting a 1% to 5% sequential revenue increase for next quarter -- or $1.77 billion in a best-case scenario. Analysts had been projecting $1.71 billion in Q4. Do you see AMD meeting or beating that target? Would you buy shares at current prices? Please weigh in using the comments box below.

Interested in more information about Advanced Micro Devices? Add it to your watchlist by clicking here.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of Intel. Motley Fool newsletter services have recommended creating a bull call spread position in Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 28, 2011, at 3:47 PM, TEBuddy wrote:

    I knew AMD would beat estimates and would be taking laptop share with Llano, but was dismayed when I heard of the Llano production. However, with their contracts with GF, I knew they would not lose too much in margins, the way they only pay for good silicon.

    I have owned since $1.90 although sold half my shares at $10. I then reinvested at $7, and doubled down last week at $4.60. I see good things from AMD, as small nibbles of market share will prop it up. Its P/E is so low its ridiculous, and any acquirer would need to pay 20 times earnings to purchase it. Otherwise the Arabs would have just bought them. AMD now has a wealthy partner to help them though.

  • Report this Comment On October 28, 2011, at 4:53 PM, BuyemHoldem wrote:

    In the past, AMD was only as strong as INTC allowed. Now that the anti-trust eyes are upon INTC, let's see how well AMD can really grow. Their chips are technically superior to INTC so, if AMD can execute on manufacturing & learn how to market, 2012 should be very interesting.

    If AMD started footing the advertising bill for retailers they way INTC does then 2012 could see a large uptick in their fortunes.

  • Report this Comment On October 28, 2011, at 8:43 PM, GeminiVI wrote:

    @BuyemHoldem Where do you get your info on AMD? I heard Bulldozer was an embarrassment.

    I might agree that you get more bang for you buck...

    But almost all the high end chips are Intel


  • Report this Comment On October 29, 2011, at 5:24 PM, TEBuddy wrote:

    Technically superior does not necessarily mean they are the fastest. Bulldozer is no joke, you need to understand its strengths as well as its now perceived weaknesses. Its strengths is what is was built to do, and will soon be a king of efficient and powerful processing. Its no wonder AMD tops the supercomuter charts, with a good number in top 10, because of their superior technology and design that appeals to such system builders.

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