AMD Share Price Drops By 3.93% – Recent Price Target Upgrades & Mining

AMD shares (NASDAQ:AMD) closed the day down 3.93% amid a more difficult day for chipmakers. With an incredibly healthy YTD return of more than 40%, AMD shareholders will not be losing sleep on this one anytime soon.

After all, this is a stock that gathered an upgrade in price target just last Friday with Melius Research moving their AMD target mark up to $265 (from $192). Data centre prospects were noted as an area of improvement, but so too were CPU sales and execution. Is crypto mining also something to consider within the AMD story?

AMD's CPUs Becoming the New Crown Jewel for Crypto Miners?

Once synonymous with the GPU market, the resurgence of cryptocurrency mining is now making waves in the CPU market, with AMD taking the lead. The days between 2020 to 2022 will be etched in the memories of PC hardware enthusiasts and gamers alike due to the sky-high prices and scarcity of GPUs, driven by an insatiable demand from the crypto mining community. A shift is now underway that sees miners turning their pockets and attention towards CPUs, with AMD's Ryzen series processors becoming particularly sought after.

At the centre of this new trend is the AMD Ryzen 9 7950X, which has become a coveted asset for miners due to its impressive capabilities tailored to crypto mining. This surge in demand is directly tied to the profitability of mining, which has been bolstered by Bitcoin reaching unprecedented new highs.

Bitcoin's enduring value growth and the broadening investments in the crypto market not only uphold the current mining boom but also escalate the pursuit of both profitable and exploratory coin mining endeavours. As miners seek out the most efficient ways to expand their operations, AMD has come under the spotlight. The processors' advantages, such as an ample L3 cache, comprehensive AVX instruction capabilities, and greater power efficiency, make them particularly effective for mining activities.

The competitive landscape in the CPU market has become markedly polarized, with Intel's offerings like the Core i9 14900K not matching up to AMD Ryzen chips in terms of mining efficiency. This competitive edge enjoyed by AMD's processors is also shaping speculations about the company's strategies to address the profoundly reinvented mining landscape. Reminiscent of Nvidia's response during the GPU mining craze, there is anticipation that AMD may introduce low hash rate versions of their upcoming Zen 5 CPUs. Such a move would be aimed at dissuading miners from depleting the stock intended for the broader consumer market.

With the crypto mining appetite aggressively expanding towards CPUs, Intel's chief financial officer has openly acknowledged the strain on their manufacturing capabilities, demonstrating the industry's vast and immediate reaction to market changes. The reliance on external wafer manufacturing underlines the pressure Intel faces in keeping up with AMD's favorable position within the mining sector.

Prospects for the future point to a persistent concern regarding the availability and pricing of high core count Zen 5 CPUs should mining demand continue unperturbed. This scenario poses both an opportunity and a challenge for AMD, balancing between feeding the mining frenzy and ensuring fair access to their products for the wider consumer market that extends beyond crypto mining.

With the next Bitcoin halving event getting closer by the day (est. April 20th) there are significant changes that flow through to the mining community, and whether the Bitcoin price will continue to surge to reflect the reduced production is a question many would love the answer to. Looking to analysts and other big names in the industry, MicroStrategy is one that continues to double down, triple down, and go all-in on Bitcoin, with a further $500million announced in order to buy up more of the digital behemoth.