AMD’s crypto boost could actually be sustainable

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Members of Japan’s idol group “Virtual Currency Girls” wearing cryptocurrency-themed masks perform in their debut stage event in Tokyo
Thomson Reuters

  • AMD reported earnings on Tuesday that topped all analyst expectations.
  • The company got a solid boost from cryptocurrency miners.
  • Analysts are now convinced the boom will continue.
  • Watch the stock trade in real time here.

AMD reported an across the board beat on earnings on Tuesday, and there was one theme that analysts seem focused on: crypto.

“While some will argue upside from Crypto should be discounted, we see Blockchain as more sustainable than most and along with the value of AMD’s core IP likely to keep the stock in a $13-15 trading range,” John Pitzer, an analyst at Credit Suisse, said in a note to clients.

In its report, AMD said that 1/3 of its computing and gaming unit growth in the last quarter was fueled by crypto mining. The company’s graphics cards have been incredibly difficult to find in stock recently, and prices have been driven through the roof. PC Gamers, who are usually the target audience for graphics cards, have expressed their frustration with the lack of supply due to crypto enthusiasm.

Some analysts have expressed concerns that the crypto boom could provide only a short-term boost for AMD, but sales of the company’s graphics cards continue to grow along with the price of many cryptocurrencies.

“Ethereum’s 300% move since October should continue to drive strong mining revenues,” Joseph Moore, an analyst at Morgan Stanley said in a note to clients.

Mark Lipacis at Jefferies said he sees continual growth of the crypto market for AMD, though Rick Schafer from Oppenheimer strays from the crowd and thinks the competition from Nvidia will be too strong for AMD to overcome.

AMD’s fourth quarter was the second-straight quarter of GAAP profitability, driven by growth in graphics card sales. Lisa Su, AMD’s CEO, said she sees the growth in graphics cards continuing, in part thanks to crypto. Su said that AMD will be working to replenish supply channels for its graphics cards to address its customers’ frustrations.

The crypto enthusiasm and good earnings numbers from AMD overshadowed any investor concerns regarding the recent Spectre and Meltdown security flaws. Su addressed the concerns on the call, saying patches for the flaws are currently being worked on, but not yet fully released. Su said AMD’s next generation of processors will be immune to the flaws.

AMD was trading up 4.74% at $13.48 a share Wednesday morning and is up more than 22% this year.

Read about the company’s earnings results here.

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