Despite posting higher revenue in 3Q2016, investors sold off stock of Advanced Micro Devices, Inc. (NASDAQ:AMD). This can be more termed as projected profit-booking on AMD stock.

The highlights

Advanced Micro Devices may face some competition in both the budget as well as mainstream market for computer graphics card. Its peer, NVIDIA Corporation (NASDAQ:NVDA) recently reported that GeForce ‘GTX1050’ will be priced for just $109, which undeniably seems inexpensive for customers. In response to the report, Advanced Micro reduced prices of its RX 460 and RX 470 products. The ‘RX 460’ is priced at $100, while the other one is priced at $170. However, as per the updates RX 470 is not easily available at that price.

For now, the investors should not bother about Nvidia’s budget card ‘GTX1050’. It doesn’t support virtual reality, whereas this drawback is not present in mainstream RX cards of AMD.

The performance

Unsurprisingly, Advanced Micro Devices third-quarter revenue surged 27% QoQ to $1.3 billion. Higher revenue for graphics and semi-custom boosted the sales. Revenue from discrete GPUs and mobile APUs jumped 11% YoY. The company closed the quarter with $772 million in inventory and $984 million in cash. The $29 million jump in inventory will boost the ramp up in GPU and semi-custom sales this quarter.

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Advanced Micro accomplished key project milestones in the reported quarter for Zen’s Summit Ridge. The firm is confident that it will introduce Zen in 1H2017 for servers and desktops. It will ship in significant volumes in 1Q2017. For the upcoming quarter, the firm will ship production samples to clients. Lisa Su, the CEO believes that Vega and Zen will drive profitability and revenue for the firm in 2017.

Top line revenue growth, operating margin improvements and free cash flow will happen in the coming 18-24 months. Advanced Micro Devices sale of debt and share issue, which netted the firm almost $1 billion, is a drawback for shareholders. Based on the recent performance, the shares may re-test the level of $5.74 in current quarter. The firm has decided not to report GPU sales not before next quarter.