AMD shares more than double on cryptocurrency market

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Chipmaker AMD has seen its shares double in value in the past year, with investment experts claiming the increase is due to the cryptocurrency craze. 

Millions of dollars have been spent by individuals and companies – mainly startups – buying equipment to mine for cryptocurrencies.

A crucial piece of that equipment is the graphics processing units that AMD sells. The demand for such GPUs have increased the prices of the component to a level where they are currently retailing for more than list price.

AMD has reported an increase in revenue for the second quarter of 2017. The total is $1.22 billion, which is an increase of 19 per cent compared to the same quarter last year.

The company says the increase is because of “higher revenue in the computing and graphics segment”.

But as quoted by CoinDesk.com, AMD’s CEO, Lisa Su, suggests the cryptocurrency craze probably won’t last.

“Relative to cryptocurrency, we have seen some elevated demand,” said Su. “But it’s important to say we didn’t have cryptocurrency in our forecast, and we’re not looking at it as a long-term growth driver. But we’ll certainly continue to watch the developments around the blockchain technologies as they go forward.”

However, the fact remains that AMD’s improved financial is down to the accelerating interest in cryptocurrencies, as CNBC noted.

The website noted that AMD shares have gone up by 102 per cent since last year, and that dwarfs the S&P 500’s 14 per cent increase.

And an analyst CNBC quotes says the growth could continue.

Jefferies analyst Mark Lipacis said: “Crypto mining helped stimulate demand for AMD GPUs in Q2, which we think could translate to a risk should cryptocurrency values decline, AMD is working to manage the crypto risk by targeting supply to the core GPU gaming market, and working with some of its AIB [add in board] partners to offer specific feature sets to segment the market between gaming & mining. AMD is not including upside from mining in its outlook.”

Many people may imagine that there will be a bubble at some point in the cryptocurrency, because some of the increases in value of some digital currencies look unsustainable.

For example, Futurism.com reports that a cryptocurrency called XRP, launched by a company called Ripple, has increased in value by 4,000 per cent since the beginning of 2017.