Advanced Micro Devices (AMD -6%) is extending yesterday's sell-off after some tepid reviews for its new Ryzen CPU chips that hit the market this week.
AMD's new Ryzen CPUs are finally a formidable competitor to Intel's (INTC) after many years of being a clear laggard in the space. The chips are roughly half the price and the specifications are comparable to that of Intel's.
A big problem for the stock right now is that there was a ton of hype coming in to the release. We have seen a classic sell the news reaction following the product launch, but some disappointment regarding the performance of the chips among the gaming community is exacerbating the move.
What's more, Intel (INTC) is likely to come out with a new set of chips in short order that once again shows they are the leader in the space. AMD won't have any answer for a while.
AMD is the #2 player in the graphics processing units (GPU) space behind NVIDIA (NVDA) and #2 in the central processing units (CPU) space behind Intel.
Despite the recent sell-off, AMD is still in a rather strong longer term uptrend. The stock has had a huge run as GPUs continue to do well in gaming. Meanwhile, GPU demand has picked up as they enable machine/deep learning capabilities that are all the rage in 2017.
AMD trades at ~54x enterprise value over EBITDA but that number comes down to 41x on fiscal 2018 estimates. NVIDIA trades at 21x EV/EBITDA and chip behemoth Intel (INTC) trades at 7.3x EV/EBITDA.
The stock is attempting to hold support at the $13 level today after giving up the $14 level rather easily yesterday afternoon.