Advanced Micro Devices, Inc. (AMD): Is This Chip Play a Good Bet?

The Sony PlayStation 4 is going to be released soon, which now contains a camera system equipped with wide-angle lenses and body movements to play games more naturally. Although Sony Corporation (ADR) (NYSE:SNE) has not announced a release date for PlayStation 4, investors should expect it to hit store shelves by the holiday season. Microsoft Corporation (NASDAQ:MSFT) didn’t mention an Xbox release date during its reveal event in Redmond, Wash., but it is expected that Microsoft Xbox 720 will arrive in time for Christmas 2013.

Conclusion

There is a possibility that Advanced Micro Devices, Inc. (NYSE:AMD) could return to profitability in the future because its focus on cost control will improve the bottom line. Long-term improvements in AMD shares depend largely on the sale of Sony PlayStation 4 and Microsoft Xbox 720 console systems. So it is difficult to predict anything now as investing in AMD could be extremely risky, but if the consoles sales are solid, AMD will rally.

The estimated EPS for the year ended 2014 is $0.03. Current industry and sector P/E ratios are 45  and 29, respectively. The target stock price is between $0.87 and $1.35, while analysts’ mean price estimate is $2.90. This shows that the stock is currently overpriced. I recommend investors avoid the stock and assess the success of PlayStation 4 and Xbox 720.

Red Chip has no position in any stocks mentioned. The Motley Fool recommends Intel and NVIDIA. The Motley Fool owns shares of Intel. Red is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is This Chip Play a Good Bet? originally appeared on Fool.com and is written by Red Chip.

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