Tuesday, October 31st 2017
AMD Stock Plunges Due to Forecast of Slowing Cryptocurrency, Console Markets
AMD's stock on Monday took a relatively steep dive in value, following a report by Morgan Stanley that pegs cryptocurrency-fueled graphics shipments to decline by 50% next year (a $250 million decline in revenue). "We believe that AMD's graphics surge has been caused by a sharp increase in sales of graphics chips to cryptocurrency miners. We expect this to meaningfully decelerate next year," Morgan Stanley analyst Joseph Moore said. At the same time, the report expects video game console demand to decline by 5.5% in 2018, which led Moore towards lowering his price target for AMD shares to $8 from $11, a 32% decline from Friday's close.
As a consequence of the report, Morgan Stanley reduced its rating on AMD shares from equal-weight to underweight, which reduced confidence in the market, and triggered a sell-off - and following the mechanism of availability and demand, a descent in stock pricing was already painted on the wall. A 9% fall isn't something to scoff at - especially when the economics surrounding it are attributed to a single - as of yet - report. AMD stock fluctuations aren't new; the company's stock has been particularly volatile in recent times - especially when compared to its peers (and competitors) Intel and NVIDIA.
"We expect cryptocurrency to gradually fade from here, consoles to decline, and graphics to be flattish," Moore wrote. "To be clear, we admire what the company has accomplished on a fraction of its competitors' budgets in both microprocessors and graphics - our cautious view is based entirely on the current stock price, and the limited potential for upside in 2018 and beyond."
To put things in perspective, though, AMD's stock is up 64% in the past 12 months through last Friday, compared with S&P 500's 21% gain in the same time-frame. This new decline comes in the wake of AMD's last week stock plunge after the announcement of the latest Q3 results, proving that more than the fact that AMD returned to profitability after years in the red, expectation is the main driver of stock market pricing.
Sources:
CNBC, via Ars Technica
As a consequence of the report, Morgan Stanley reduced its rating on AMD shares from equal-weight to underweight, which reduced confidence in the market, and triggered a sell-off - and following the mechanism of availability and demand, a descent in stock pricing was already painted on the wall. A 9% fall isn't something to scoff at - especially when the economics surrounding it are attributed to a single - as of yet - report. AMD stock fluctuations aren't new; the company's stock has been particularly volatile in recent times - especially when compared to its peers (and competitors) Intel and NVIDIA.
To put things in perspective, though, AMD's stock is up 64% in the past 12 months through last Friday, compared with S&P 500's 21% gain in the same time-frame. This new decline comes in the wake of AMD's last week stock plunge after the announcement of the latest Q3 results, proving that more than the fact that AMD returned to profitability after years in the red, expectation is the main driver of stock market pricing.
45 Comments on AMD Stock Plunges Due to Forecast of Slowing Cryptocurrency, Console Markets
so I think , wall street knows something about the bubble cryptovaluts will crack LOUD as hell. also saudi king say it will by big enron )) most investment to cryptos is from S.korea and japan., canada...countries without big gold reserve)) or false gold bars)))
it will crack -- becouse who will buy cassino chip for 6333usd and wait for 10K :laugh::laugh: most of people in west have no saved that much in bank .just debt debt
also second nature "thing" for keep cryptos alive is online world drugs markets. and that was punnished hard with life doom to :( silk road creator.
But imagine for a sec that it would be.... Compared to that shitty 5-10% performance increase of Intel's. ;)
But yeah, if it was all that bad, all of these parts companies (Kingston, Corsair, etc) wouldn't be thriving.
But these companies have hardly any idea what their damage can be by sending out such a report and at what cost shares are being de-valued.
Half a million extra cards sold would say that there is more people using cards for mining than gaming.
marketwatchHigh end Volta exists just not in a market we can buy.
The exact number I'd like to know is how many cards are being used for gaming and how many for mining. I'm not sure if the number is out there. In your article it says a 3:1 ratio somewhere. I wasn't too focused while reading because I was on the phone/am on the phone.