Stock for AMD, Nvidia and Intel falls after year long bullish run- Here’s why

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After rising in value by quite a bit over the past few months, it seems that all of the major companies in gaming and computer hardware have seen a decline in their stock prices over the past few days. There are many reasons as to why the prices soared in the first place and why they eventually started to decline, here are a few of them:

The crypto boom

Although Intel is not known for its GPUs, it’s one of the best CPU providers out there with some of the most powerful processor chips to date. On the other hand, Nvidia and AMD are mostly known for their wide range of GPUs, especially their high-end range of GPUs because of their capability to run games at maximum settings and beyond.

However, gaming was not the only thing that Intel chips, AMD and Nvidia cards started getting used for. The cryptocurrency boom in 2017 which lasted till early 2018 saw a massive increase in demand for graphics cards due to the increase in cryptocurrency mining. The demand for GPUs was so high that you would hardly find one in stock. If a graphics card was somehow available from a retailer, the price would be double or triple the original price set by the respective companies.

Therefore, it’s safe to say that a large reason for the increase in stock prices for all three companies is attributed to the crypto boom which led to higher demands for CPUs and GPUs alike. Although GPUs were the ones that were mainly demanded, you can’t build a computer without a CPU, and you need to pack a lot of processing power if you’re going to get a high-end GPU otherwise your processor will become a bottleneck. So, both these things really go hand in hand with each other.

The quality of products

The past year has been great for gaming, not just the games, but the hardware that’s come out. There’s insanely powerful hardware out there right now which one can purchase and use for gaming in 4K at 120 fps (given the games have such settings).

One doesn’t need to spend that much money either as many people consider 1080p with 60 FPS the standard still which can be achieved using pretty cheap cards nowadays. The variety of products to choose from is huge which means that if one wants to spend a lot of money, they can and if one can’t afford the higher-end GPUs, they can still fulfill their gaming requirements by opting for the cheaper cards.

Intel also recently revealed the new 8th-gen Coffee Lake processors including the six-core i9 processor. That’s a lot of power right there and not only is this processor available on PC, it has also made its way onto laptops as well. Moreover, new Ryzen chips are also on the horizon as well as the second generation of Nvidia GPUs. The future is bright, and the current situation is pretty good too, so that would explain the upward trend in investment in stocks for all of these companies.

Why the stocks fell

Stock prices have been falling for the past few days for Intel, AMD, and Nvidia and it might be because the hype for cryptocurrency mining has finally died down. One of the main reasons why stocks increased in the first place was due to the fact that revenue was above-average because of the upward demand that crypto mining created.

Now that the prices have settled back to normal, it’s evident that cryptocurrency mining isn’t as big as it used to be which means that revenue won’t be as great as it was a few months ago. Bernstein’s Stacy Rasgon also commented on AMD’s current situation as he noted:

“Analysis of available data suggests CPUs have likely been relatively flattish, with strong Ryzen offset by legacy declines”.
“In fact, we believe GPUs have been by far the primary growth driver, likely up 80%+ YoY in 2017, & approaching ~$700M in Q118, up >200% YoY.”

Rasgon went on to say that the company benefitted from increased average selling prices for its GPUs and that most of the demand for the high-end GPUs came from miners and not gamers. Rasgon then warned investors to be wary of the situation because if what he says does come out to be true, then AMD could be losing out on a lot of money.

Although Rasgon only commented on AMD, the same argument can be applied for the others too. More often than not, people follow the advice of others, especially those with experience, so it’s no surprise that Stacy Rasgon’s warning might have triggered the decline we’ve seen in the past few days.

AMD’s stock has gone up by 10% in the past year according to marketwatch while growing over 50% in just 2018.  Nvidia and Intel have had better luck over the span of 12 months as they’ve grown both by over 50% but AMD’s 2018 figures are better. However, all three of them have seen a decline in the past few days with Intel also in negative for a month now.

Although the bullish run finally comes to an end, the companies will continue to grow because all three of them have a lot more stuff that will be coming in the next few months. Therefore, expect stock prices to soar back up again when new products hit the markets.

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