Why AMD stock jumped 23% in November


What happened

Actions of Advanced micro-systems (NASDAQ: AMD) climbed 23% last month, according to data provided by S&P Global Market Intelligence, after the chipmaker reported strong third quarter results and announced a successful acquisition in late October.

So what

AMD’s revenue jumped 56% year-on-year to $ 2.8 billion, while its net profit climbed 148% to $ 390 million, or $ 0.32 per share. The gains were fueled by robust sales of AMD’s popular Ryzen and Radeon processors. “Our business accelerated in the third quarter as strong demand for our PC, gaming and data center products generated record quarterly revenues,” CEO Lisa Su said in a press release.

The benefits of Advanced Micro Devices are growing rapidly. Image source: Getty Images.

AMD also announced the potentially groundbreaking acquisition of its colleague semiconductor maker Xilinx (NASDAQ: XLNX). AMD says the merger will expand its product portfolio into promising new areas, such as adaptive computing solutions, and thereby bring its total addressable market to $ 110 billion. The deal is also expected to immediately boost AMD’s profits and cash flow when it closes in late 2021.

Now what

AMD’s success stems in part from its new ability to take shares in struggling chip giant Intelligence (NASDAQ: INTC). AMD’s processors have achieved a technological lead in key markets such as gaming as Intel has suffered costly production delays. AMD’s market share gains appear likely to continue into 2021, so more good times could be in store for the chipmaker’s investors in the coming year.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


About Nereida Nystrom

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