I will not sit here and rave on about just how much pain AMD (AMD) is about to bring to Intel (NASDAQ:INTC). You can read all about it at various sites. Let’s just say that AMD CPUs are bringing a ton of performance-per-dollar and this is going to hurt Intel. Also, the Ryzen 3000 comes with higher profit margins so expect those gross margins to trickle up. GPU has been the sleepy hindrance on AMD stock for some time. While the CPU division has been firing on all cylinders, GPU has just lagged behind. That will hopefully change when Navi is released shortly.

MAGA (Make AMD Great Again)

We know (and the market has known) for some time now just how good AMD CPUs are. However, few are betting on Navi really closing the gap on Nvidia (NVDA) because everyone believes Nvidia to be invincible. Well, they are not. Much like Intel, AMD is closing the gap on Nvidia. This is not to say that Navi is going to dominate Nvidia — they do not have to. All AMD has to do is put out a competitive solution at a very favorable price point and they will suck away market share from Nvidia. If they introduce Navi at favorable price points, Nvidia will be unable to command a premium for its product and might have to cut prices. Obviously, this will impact margins for Nvidia while driving them for Navi (since Navi will be on a much better process than the aging Polaris and Vega.)My precious….

Remember Sméagol from Lord of the Rings? I often find myself thinking one of my buddies is Sméagol. He is unable to part with AMD, unable to sell no matter how high the stock goes (or how low it might start to go). He is unable to trade options. He is Sméagol. In the following article, we will cover some of the mentality you need to survive your inner Sméagol and all the upcoming news concerning AMD that you crave.

Mentality

Stay in the market long enough and people get attached to stocks. They fall in love with a stock, and while this can work for a period of time, eventually something comes along that burns them. The long-term survivors of the markets have learned – not – to fall in love with a stock. A stock, after all, is just something to trade (or invest in) but never to fall in love with.

And Trade We Shall

Every time I get into things I do not fully know – I get burned. As I should. In these instances, I’m the pasty, the Timmy, or the bag holder. Stick with what you know and look for trading catalysts (or things that get the masses in a state of exuberance.) AMD has several newsworthy events in the pipeline that are sure to rile the masses up and present us with trading opportunities such as: 1. Ryzen 2.0 2. Navi GPU news 3. Continued forward momentum from recent super computer wins. On May 7 Cray (CRAY) announced it will be providing a $600 million super computing solution to the government. Why does this matter? Besides the enormous number of CPUs and GPUs this project will consume, it represents AMD’s return to the supercomputing fray along with the prestige (and profits) that come along with it. But this does not stop at just profits. AMD is going to get paid quite a chunk of change to do R&D work per the 8-K: “About $40 million of the NRE Contract payments will be used to fund development work at our technology partners, principally AMD. Payments for work under the NRE Contract will be due following submission of an invoice for specific milestones and/or deliverables that have been completed. Work under the NRE Contract is currently expected to be completed between 2019 and 2026, with much of such work completed between 2019 and 2021.”

Catalysts

What moves the masses to buy (or sell)? Why… it’s news, hype, and things that get people excited and my my my – a TON of excitement is coming down the pipeline. Per AMD.com and Techspot.com.

  • AMD will present at the Bank of America Merrill Lynch 2019 Global Technology Conference at 8:00 a.m. PT on Tuesday, June 4, 2019.
  • AMD Next Horizon Gaming event, Monday, June 10, at E3 2019, AMD will host its Next Horizon Gaming event, where Dr. Lisa Su is expected to give a presentation detailing next generation products related to gaming across PCs, consoles, and the cloud. AMD could also unwrap Navi details here, as AMD has chosen this venue for past graphics card launches like the R9 Fury X and the RX 400-series. There will be a live stream, which can be viewed via AMD’s YouTube channel or Facebook page.
  • Hot Chips, Monday, August 19: At Hot Chips, Dr. Lisa Su will deliver yet another keynote, titled “Delivering the Future of High-Performance Computing with System, Software and Silicon Co-Optimization.” Hot Chips has become a place of preference for chip makers to dive into microarchitecture overviews, and AMD is expected to discuss the x86 Zen 2 and Navi architectures and their roadmap for the months and years to come.

What this means for traders in the short term is that the masses are about to get riled up from late May to August. For investors MAGA comes into play with the GPU division about to release Navi.

Disclosure: I am/we are long AMD, NVDA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: We own AMD common stock and $30 calls that expire in January 2021.

We also have a very small position in NVDA that we might sell off before NAVI arrives.

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