Before the arrival of AMD Ryzen processors, the company was on the brink of extinction. Processors of an outdated architecture and two years without innovating led the company to a critical situation. Zen architecture has saved the company and even in the last year we have seen brutal growth. This year on the stock market the company has risen 86% in one year, something never seen before.
The company's strong rise is due to its RDNA GPUs and, of course, its Zen CPUs. This growth was further boosted last summer with the arrival of the Zen 2 architecture at 7nm. However, it's not all good news, as analysts and investors are reportedly starting to pressure Lisa Su to raise prices.
[amazon box="B07SXMZLPK"]Investors and shareholders want AMD to raise prices
One of the factors that are generating strong sales of Ryzen processors are their prices. Lisa Su, CEO of AMD, is committed to offering processors with excellent performance and a groundbreaking price. This is wreaking havoc on Intel, in addition to the company's own problems. Not to mention that Sony and Microsoft used AMD CPUs and GPUs.
On the stock market, the company has managed to establish itself at 40 dollars per share (approximately) when a year ago it was 20 dollars. But some analysts say that this figure is low because they offer excessively cheap prices. This causes a very tight profit margin. According to these analysts, this short-term strategy is fine, but if you want to generate growth and gain market share with financial stability, you need to improve capitalization by raising prices.
AMD has certainly always had a profit margin over Intel and NVIDIA, which have a gross margin of over 50%. This higher profit margin from AMD's competitors causes their prices to be higher. Analysts consider that the situation is not sustainable, since practically all the benefits generated are invested in improving. They indicate that AMD could stop growing and enter losses again, if they do not raise prices.
Complicated situation
The company will no longer be able to hide behind prices and must trust users and that its products are better than those of the competition. They should offer good performance and great performance, something that is currently a reality in processors. But the price hike would almost certainly mean lost sales, but the profit margin will be higher. This will allow the company to be more profitable in the long term.
As far as we know, AMD has not yet said anything about what was said by some analysts and investors. A situation that will not occur at the moment, although it could be reflected in the Zen3 processors. Lisa Su is faced with continuing with her low price policy and making almost no profit or raising prices and perhaps selling less?
Source: wccftech
