As AMD’s share price continues to soar, analysts are expressing caution over how dependent the firm is on cryptocurrency miners…
AMD is one of a number of performance hardware firms that’s seen substantial business from crypto-mining. Its graphical processing units (GPUs) have proven to be fruitful for miners, who look to eke out the maximum performance from their rigs.
The consequence of that has been a push upwards in the price of performance graphics cards, to the frustration of PC videogamers who are having to pay more for their hardware. But firms such as AMD have been warned too that this is a bubble that may burst.
That latest warning has come from analysts over just how dependent AMD has become on cryptocurrency mining. Its share price has soared by over 25% in the last month, yet analysts from Bernstein and Morgan Stanley are both worried. The threats identified are a downturn in mining, or the competition – Nvidia mainly – eating away at that segment of the market.
As Marketwatch reports, AMD stock has shot up 61% in 2018. Joseph Moore of Morgan Stanley is quoted as saying that “cryptocurrency strength has to some degree offset the slow and steady progress establishing momentum in desktop and server microprocessors after several years away from those markets — but that higher revenue has driven higher operating expense, which further raises the bar for the processor business if crypto momentum should fade”.
AMD, for its part, has said in the past that it sees blockchain and cryptocurrency booms as ‘short term’, making up around 10% of the company’s business.