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Advanced Micro Devices' (NASDAQ: AMD) stock price has skyrocketed in 2016, jumping more than 260% since the beginning of the year. But this year brought more than just stock price gains for the company.
AMD's revenues bounced back this year from one of their lowest points last year, and the company managed to expand its discrete desktop GPU market share against rival NVIDIA (NASDAQ: NVDA) as well. Additionally, AMD is poised to benefit from the expanding virtual reality market.
Here's how all of this looks for AMD in three charts.
Revenue is finally moving in the right direction
AMD's revenue has fallen about 28% from its five-year high, and it now sit at about $1.3 billion in the most recent quarter. But while the company is far below its five-year high, AMD's revenues are starting to move back in the right direction. The second and third quarters both saw positive revenue gains on a year-over-year basis, with the biggest jump -- 23% -- coming in the third quarter.
Image source: YCharts.
Much of the growth came from four straight quarters of growth in the company's professional graphics products. Investors should know that fourth-quarter revenues are expected to decline on a sequential basis as the company moves away from its usual "annual semi custom sales peak in the third quarter." But even with that decline, fourth-quarter revenue is expected to increase 12% year over year at the midpoint of guidance.
AMD expects revenue to be up just 6% for full-year 2016. Investors should keep a close eye on the company's ability grow sales -- and whether it can continue pushing revenue back in the right direction as AMD heads into the new year.
Discrete desktop market share
Another bright spot for AMD right now is the company's discrete desktop GPU market share. The company's graphics processors compete directly with NVIDIA, and while AMD is still an underdog, it's starting to gain momentum.
Last year, AMD had fallen to about 18% market share, but it's slowly ticked up since then and now stands at about an estimated 30%.
Data source: Jon Peddie Research, via anandtech.com.
AMD still has a long way to go to best NVIDIA's GPUs, but with the GPU market essentially a two-player game at this point, any gains AMD makes in the space should directly help the company's revenues.
Expanding virtual reality opportunities
The virtual reality (VR) market is just getting started, but AMD is in fantastic position to benefit. Here's what the virtual reality opportunity looks like over the next few years, as combined sales of hardware and software jump from under $5 billion in 2016 to an estimated $40 billion by 2020 .
Image source: SuperData.
AMD's opportunity lies in its graphics cards for VR-ready computers, but also in its sales of GPUs for gaming consoles, like Sony's (NYSE: SNE) PlayStation 4. Sony is shaping up to be a major player in the VR space. The company recently released its VR headset that's compatible with the PS4, PS4 Slim, and upgraded PS4 Pro, and it has already sold more than 50 million PS4 consoles to date.
The company's new VR headset could help spur even more sales of the PS4 lineup, which would then boost sales of AMD's processors. With Sony teaming up with 230 developers and releasing new VR games and content, AMD is in the perfect position to benefit.
While AMD has had a rough few years of falling revenue and discrete desktop GPU market share, the company appears to be making up for lost time. If it can can continue on this path -- and benefit from the rise of VR as well -- then AMD investors can expect another promising year from the company.
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