Here's Why Advanced Micro Devices (AMD) Stock Is Soaring Today

Shares of Advanced Micro Devices (NASDAQ:AMD) gained nearly 6.5% in morning trading Tuesday after investors received several pieces of good news about the company, including the announcement that its Vega GPU technology would be included in Apple’s (NASDAQ:AAPL) new iMac Pro.

During Monday’s keynote at the Worldwide Developers Conference, Apple previewed the new iMac Pro, which it promises is the “most powerful Mac ever made.” The iMac Pro is set to ship in December and will start at $4,999.

(Credit: Apple)

The new workstation is packed with the most advanced technology on the market, including what Apple is referring to as the “most advanced graphics ever in a Mac”—the new Radeon Pro Vega GPU from AMD.

“Featuring a new next-generation compute core and up to 16GB of on-package high-bandwidth memory (HBM2), iMac Pro with the Vega GPU delivers up to an amazing 11 Teraflops of single-precision compute power for real-time 3D rendering and immersive, high frame rate VR,” Apple said in its official press release.

Interestingly enough, the iMac Pro will also include processors from one of AMD’s key rivals, Intel (NASDAQ:INTC) . Apple said that the computer will feature “next-generation” Intel Xeon processors with up to 18 cores.

Nevertheless, another reason for AMD’s gain on Tuesday morning is its continued success over Intel. As investors have likely heard by now, AMD recently unveiled its new line of Ryzen processors. While AMD has traditionally been considered a budget option, Ryzen was seen as an effort to break into the high-performance market. What’s more, the company’s upcoming Threadripper product also promises to pack a serious punch.

In response, Intel has announced its next line of processors, and early reviews have been less-than-favorable. For example, Seeking Alpha’s Chris Lau called Intel’s response to Ryzen and Threadripper “embarrassing and rushed.”

“Intel's Core X processor announcement, with the highest-end model having 18-cores and 36-threads, is hardly scaring Advanced Micro Devices,” Lau said. “Not only do prices fail to pressure AMD's upcoming Threadripper, but the proprietary design for the Intel X299 motherboard chipset will alienate loyal Intel customers.”

Lau’s analysis perfectly describes why AMD investors are so giddy these days—the company is no longer playing from behind against Intel. AMD’s high-end platform is just as—if not more—powerful than Intel’s, and it almost always beats Intel on price as well.

Nevertheless, it’s been an up-and-down year for AMD shares thus far. Despite strength throughout the semiconductor industry, AMD is basically flat year-to-date. The stock currently has a Zacks Rank #3 (Hold).

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