AMD Shares Became the Best Asset in 2018 Among the 500 Largest Companies
Due to a 54% decrease in the fourth quarter of 2018, NVIDIA shares were the worst asset for investments in the list of S&P 500, a basic stock index with a basket of 500 selected US stock companies with the highest capitalization. In contrast to them, AMD shares turned out to be quite a profitable asset in the longer term, although they are a bit low noticeably in price over the past few months as well. And even more, if we look at the annual dynamics, the price of AMD shares increased by 73%, and this allows us to call these shares as the most profitable securities in 2018 from the entire list of S&P 500.
In fact, since September 2018, when AMD shares reached their maximum, their rate had dropped by 42%. However, over the previous months, the growth of AMD shares had a much larger scale, and even exceeded the level of 200% per year. Therefore, even such a correction could not make them an unattractive investment asset.
However it shouldn’t be believed that the future of AMD shares is cloudless. The Company’s capitalization is relatively low; it is only $18 billion, while the capitalization of its main competitors, NVIDIA and Intel, reaches $83 and $216 billion, correspondingly. And this means that, firstly, AMD has a much lower “margin of safety”, and secondly, the Company cannot invest equally significant amount of funds in research and development, especially against the background of a mass leaving the Company by engineering personnel. In addition, the fact that it does not show adequate activity in the growing markets of artificial intelligence and autonomous driving can play against AMD.
In 2018, AMD made serious progress, and the fact that its shares showed strong growth reflects investor confidence in the Company’s ability to offer competitive products in the future.
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