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Why Advanced Micro Devices Stock Rose 15% in November

By John Ballard – Dec 3, 2019 at 1:44PM

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Investors are impressed with the company's ability to continue gaining market share in the CPU space.

What happened

Shares of Advanced Micro Devices (AMD 0.13%) gained 15.4% last month, according to data provided by S&P Global Market Intelligence.

The chipmaker reported its best quarterly revenue since 2005 when it reported its latest earnings results in October. The stock was rising heading into that report and continued to rise in November after posting solid quarterly results. 

A computer processor on a blue circuit board with brightly lit gold circuit lines shooting out in all directions.

Image source: Getty Images.

So what

Investors are increasingly bullish on AMD's prospects, as it takes market share away from Intel (INTC 1.81%). In the last quarter, revenue rose 9% year over year. But growth seems to be accelerating, given that revenue was up 18% sequentially over the previous quarter. These results reflect surging demand for AMD's 7-nanometer Ryzen, Radeon, and EPYC processors across the consumer and enterprise markets. 

All in all, AMD's gains on Intel just go to show that things can change quickly in the technology sector.

Now what

There is no denying that AMD has been in good hands under CEO Lisa Su, who took over as CEO in 2014. Su is steering the company to be competitive in high-performance computing. It's apparent that AMD is not just competitive; it is currently playing the role of David versus Goliath. AMD is gaining market share across desktop, notebook, and server CPUs against a company that spends more on research and development each year than AMD generates in total revenue. 

Currently, AMD's server share is in the low single digits, but Su is targeting double-digit server share by the middle of 2020. So far, AMD is right on schedule with its plan to improve margins and drive double-digit revenue growth over the long term, and that's why the stock moved higher last month. 

John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: short January 2020 $50 calls on Intel. The Motley Fool has a disclosure policy.

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