Shareholders of Advanced Micro Devices Inc (NASDAQ:AMD) enjoyed a price surge on Wednesday after news that the tech company’s competition produced faulty products surfaced. AMD shares surged by more than 5 percent in one day, and many onlookers believe that this could be the company’s best bet to permanently put itself ahead of the competition and gain a new stranglehold on the semiconductor market.
Profiting off Intel’s disaster
AMD’s period of good luck began with a simple news report. After The Register reported that Intel (NASDAQ:INTC), one of AMD’s greatest competitors, had a “fundamental design flaw” in one of its most popular product lines, investors began abandoning the company in droves. Cybersecurity is no small issue in today’s tech market, and with horror stories of data breaches constantly dominated media headlines, Intel had a tough time reassuring investors that it would be capable of winning back consumer’s confidence.
While Intel’s stocks dived by more than 3 percent, ADM’s steadily went up, and the company’s unique position as one of the few chipmakers untainted by security concerns could stand to make it a lot of money. As bad press continues to mob AMD’s competitors for the near future, the company has been presented with a unique opportunity to brand itself as a leading innovator when it comes to cybersecurity.
AMD will have to hurry if it hopes to capitalize on recent news to ensure its share prices enjoy a permanent bub in valuation, however; competitors like Intel are already scrambling to assure investors and consumers alike that previous security vulnerabilities have been patched. Still, tech-savvy consumers and investors furious at the bad press aren’t likely to forget Intel’s mistake anytime soon, and companies like AMD will be sure to remind customers that their chips don’t have as many vulnerability crises as their competitors.
After a rough 2017, AMD will be grateful for the break its received; the company faced serious earnings expectations in 2017 that it was unable to meet, and its stocks suffered as a result. Many still consider AMD do be highly undervalued, however, and if the company can continue to avoid public gaffes like those plaguing Intel and others in the tech market, it may yet win over a name for itself as a dependable alternative that puts user security first.
AMD needs to do more
AMD still has a lot on its plate if it hopes to win over investor’s confidence in the long term, however. Not counting Intel’s current PR disaster, AMD has often struggled to compete with many of its competitors, and a harsh 2017 that saw Intel’s share prices grow while AMD’s shrunk has many writing off the company’s future early in the new year.
The semiconductor industry is nonetheless rapidly growing, and if AMD plays its cards right, it could leverage the ongoing PR crisis its competitors are suffering from into a useful tool for rebranding itself as the superior chipmaker. The tech market is dominated by consumers who are seriously committed to their favorite tech producers and software developers like Superbowl 2018, and developing a name for itself as a chipmaker who places users’ data privacy at the forefront of its business operations could be a boon for AMD.
AMD’s newest product, its Zen-based CPUs, would be an ideal place for it to start. If the company can market its hardware as being a dependable and cheap alternative to Intel’s, consumers are likely to stick with it for years to come, provided they don’t want hackers to make off with their valuable and personal data.
While some claim that the current hubbub over Intel’s error is “making mountains of molehills,” the truth is that the public is already beginning to associate Intel chips with security vulnerabilities, and a story like this can’t be pulled from the public limelight after its been posted. Users will continue to share concerns about Intel’s chip vulnerabilities for days, if not weeks to come, and the company will have to deal with a torrential downfall of negative press.
If AMD acts quickly, and follows up its announcement that the vast majority of its chips aren’t affected by the flaw with greater enhancements to its chip making process and a stronger commitment to cybersecurity, its stock bump could become permanent. IoT-crazy tech consumers have long memories, and AMD would be foolish if it doesn’t rapidly move to exploit this serious error by its leading competitor. Still, Intel is a heavy champion to dethrone, and with significantly greater resources than AMD, it will continue to dominate the chip market for some time. Better products and a commitment to user security will always win over customers – and thus shareholders – however, and if AMD navigates the current chip dilemma carefully, its financial backers could reap the dividends for years to come.