The Console Wars’ Other Battlefront

June 19, 2020

Sony and Microsoft both announced that their latest generation of gaming consoles will be ready this holiday season.

And the timing couldn’t be better.

With millions stuck inside over the last few months, gaming has gotten big.

The 2020 global games market is expected to grow 9.3% over last year. That number is only supposed to climb even more over the next few years.

With a new battle in the console wars between Sony, Microsoft and Nintendo, this is a crucial period for their underlying hardware.

With more gamers than ever in this space, and a new generation of graphics on the way, it’s no wonder companies like Advanced Micro Devices Inc. (NASDAQ: AMD) and NVIDIA Corp. (NASDAQ: NVDA) have been huge winners so far in 2020.

Both should continue to dominate the likes of Intel Corp. (NASDAQ:INTC) as its share of the gaming industry continues to lag.

But figuring out which of these two gaming hardware companies stand to make the largest gains in the next six months is an enormous profit opportunity.

AMD vs. NVIDIA

In some ways, it’s disingenuous to compare the two. Sure, they do directly compete in the GPU market. For PC gamers, that’s the biggest choice when picking out a new rig.

For years, NVIDIA has had the advantage in that particular field. But its cards are also much more expensive in most cases than AMD offerings.

While both companies are set to release their own next-gen GPUs later this year, AMD’s will be a larger step up. Depending on who you ask, NVIDIA will retain the top spot in performance. But AMD has another huge advantage.

Sony and Microsoft both use AMD in their consoles. And while PC gamers will need to upgrade their own rigs to compete with the PS5 and the Xbox Series X, they remain a smaller market (25% vs. 28% for consoles).

Even more important is that it is a fractured one. NVIDIA does lead, with about twice the annual revenue from GPUs than either AMD or Intel. But AMD has been gaining.

Let’s look at this from a purely economic standpoint.

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You have NVIDIA on one side. It controls a large portion of the PC gaming market. It also has generally acknowledged, the better technology. But it doesn’t directly benefit from the console launches later this year.

AMD, on the other hand, will make a fortune from the new gamers getting into the new consoles. It is also gaining on both NVIDIA’s technological advantage, as well as its PC market share.

Finally, AMD is much more active in the mobile space. And has solid new contracts with Apple for its own next-gen devices.

Price is the Name of the Game

Both companies have been on fire. And, they should remain on fire.

There’s a huge amount of money pouring into this industry. Black Friday alone could be Microsoft’s and Sony’s largest day in years.

AMD and NVIDIA will both be huge beneficiaries. PC gamers will upgrade their own machines just to be able to play games released on the consoles, exclusives aside.

But, at the end of the day, it all comes down to price.

As you can see in the above chart, NVIDIA has been an even larger Wall Street darling than AMD. With a 1-year return of 141%, its shareholders have already locked in more of these tailwinds than AMD’s.

That’s the opportunity. AMD has just as much profit potential in the second half of 2020 as NVDA. Probably much more so, as the new consoles make their way to market. But its shares don’t reflect that yet.

Both are solid stocks to own right now. But AMD is a screaming buy.

In fact, our own Wealthy Tech Investor readers have already made 11.1% on AMD. They, in fact, are positioned to see much larger gains. They also already locked in 73% earlier this year on NVDA.

So, when it comes to the next stage of growth for these companies, they’re already positioned. To follow this story and lock in the best possible gains from it, check this out.

To your prosperity,

Joshua M. Belanger
Founder & Publisher

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%

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