Cryptocurrency Upswing Could Boost Chip Maker AMD’s Market Value
The boom in the cryptocurrency market did not only benefit crypto traders, but also chipmakers like Advanced Micro Devices (AMD) the famed multinational semiconductor company. Ruben Roy, analyst at institutional research service provider MKM Partners, is certain the chip manufacturer will benefit from the nascent digital currency industry’s growth.
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Roy told CNBC, “The near-term numbers both for December and the guide for March are going to be quite good. I think the setup for crypto is quite good”
Crypto Mining to Accelerate Chip Sales
The company is slated to report its 4th quarter earnings today. MKM research pointed out that the demand for graphics processing chips has skyrocketed, due to their use in cryptocurrency mining. Though Bitcoin mining requires algorithm-specific ASIC chips these days, miners still use consumer grade GPUs to mine popular coins like Ethereum and Monero.
Cryptocurrency mining rigs use these graphics cards to solve complex mathematical problems to authenticate payments on the network, in return the miner is rewarded with digital tokens. The crypto mining business has accelerated sales of high-powered GPU chips and graphics cards from manufacturers like AMD and Nvidia.
In addition, Roy said AMD could realize a greater than expected target for its March quarter too. He raised the company’s fair value estimate on shares to $14.50, from $13. The predicted hike would imply company’s third straight quarter of profitability.
“From a longer-term perspective what it will take for us to get more positive on the stock, I think we need to see AMD take some of these new products that I mentioned and start to get some meaningful market share,” he said.
AMD Overtakes Nvidia
AMD shares have increased by 30 percent in January 2018. The chip manufacturers’ growth has even crossed its rival, leading chipmaker Nvidia in SMH semiconductor ETF.
MKM Partners’ evaluation is in alignment with other equity research firms. FactSet, the financial research solution company, estimated AMD’s share value at $14.23, while institutional research and brokerage firm Rosenblatt Securities, estimated the AMD share price at $22. On the contrary, Morningstar Equity Research approximated its share value at $9.
The growing cryptocurrency mining industry has even caused a shortage in supply of mid and high-end graphics cards from AMD and Nvidia, sometimes angering gaming enthusiasts.
Most miners, including individuals and large companies, purchase these processing cards in bulk to build mining rigs. It is likely that chip manufacturers are going to enjoy the boom in the cryptocurrency space for a while longer.
Will AMD benefit from the bitcoin boom in 2018? Let us know your views in comments below.
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