AMD Investors Shrug Off Negative Headlines

Advanced Micro Devices, Inc. AMD stock is holding steady Tuesday after researchers uncovered 13 vulnerabilities in the company’s Ryzen and EPYC chips that are similar to the Spectre and Meltdown vulnerabilities uncovered in Intel Corporation INTC chips earlier this year.

According to security company CTS Labs, the vulnerabilities could allow potential hackers access to data stored on AMD processors and provide an opening for hackers to install malicious malware on the processors.

AMD’s Ryzen chips power desktop and laptop computers, and its EPYC chips power servers. Statista reports AMD processors are found in 22 percent of computers, while Intel processors hold a 77 percent market share.

“At AMD, security is a top priority and we are continually working to ensure the safety of our users as new risks arise. We are investigating this report, which we just received, to understand the methodology and merit of the findings,” an AMD spokesperson said in response to the new report.

Nail In The Coffin?

Viceroy Research said Tuesday there may be no coming back from the new batch of vulnerabilities, some of which the firm says will be difficult or impossible for AMD to fix. In its report, Viceroy said the vulnerabilities likely came as a result of AMD rushing products to market to avoid falling further behind its peers. After consulting experts, Viceroy said the AMD vulnerabilities could be very dangerous on an international level and could do irreparable damage to AMD on a commercial level.

“In light of CTS’s discoveries, the meteoric rise of AMD’s stock price now appears to be totally unjustified and entirely unsustainable. We believe AMD is worth $0.00 and will have no choice but to file for Chapter 11 (Bankruptcy) in order to effectively deal with the repercussions of recent discoveries,” Viceroy said.

CNBC had originally planned to discuss Viceroy's report on “Halftime Report” show but later canceled the segment, leading some to question its validity.

To Make Matters Worse…

According to Digitimes, demand for AMD processors from the cryptocurrency market could be dropping off. Market sources tell Digitimes that AMD competitor NVIDIA Corporation NVDA is already taking steps to respond to falling cryptocurrency demand.

In February, Bernstein analyst Mark Li said things could get ugly fast for AMD if cryptocurrency mining demand starts to fall.

“If mining eventually becomes sustainably unprofitable (for example, if currency pricing were to permanently collapse), there is a risk of cards purchased for mining getting dumped in the secondary market and depressing sales for a while,” he said in a note.

Li said mining demand is contingent on the price of cryptocurrency Ethereum. The price of Ethereum is down about 17 percent in the past week.

Price Action

After initially dipping from its highs on Tuesday morning, AMD stock bounced back after investors seemingly shrugged off the new vulnerability report. AMD has witnessed some extraordinary option trading volume in recent days.

Benzinga Pro issued no less than 17 options trading alerts to subscribers on Monday between 9:33 a.m. and 12:15 p.m. Surprisingly, the majority of the option trading volume was bullish in nature.

At time of publication, AMD shares were flirting with the $12 level, up nearly 4 percent on the day after hitting an intra-day low of $11.10.

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Image credit: Quintin Lin [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons