Advanced Micro Devices, Inc. (AMD) and NVIDIA Corporation (NVDA) Look like GPU Winners: Top Analyst


Semiconductor giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA) are riding the wave of success from their recent GPU launches, indicating both bolstered customer supply and “attractive” price-for-performance in light of continued premium pricing.

In light of these “GPU refreshes,” MKM top analyst Ian Ing offers his bullish forecast on both companies.

Ing reiterates a Buy rating on shares of AMD with an $8.00 price target, which represents just under a 32% increase from where the stock is currently trading. Additionally, Ing reiterates a Buy rating on NVDA, while lifting the price target from $70 to $74, which represents just under a 20% increase from where the stock is currently trading.

The analyst has increased NVDA estimates for the upcoming quarters, with higher revenue projections for third and fourth quarter for the fiscal year of 2017.

In regards to AMD, Ing adds, “With AMD’s completed $1.3bn in offerings that retired straight debt, it is on a faster path to net income profitability (a key hurdle for some long-only investors).” Furthermore, “Our checks indicate AMD is shipping product in volume and customers like the pricefor-performance enough to continue to pay a premium. There should be strong tailwinds in discrete GPUs (20-25% of sales) in 2H16 following a relatively faster Polaris launch vs. last year’s R9 series.”

“For NVDA and AMD, our proprietary scrapes of retail GPU card sites saw robust increases in supply (starting in August) while preserving some price premium across their respective GPU refreshes (Pascal and Polaris). It appears that both suppliers are succeeding in their respective markets, with NVDA focused on the premium enthusiast market and AMD more focused on the sub-$200 volume-market,” Ing concludes.

From Ing’s perspective, AMD faces strong tailwinds in discrete GPUs in the second half of 2016, and NVDA’s gaming market contributions come across positive for sales and gross margins alike.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Ian Ing has achieved a high ranking of #57 out of 4,151 analysts. Ing upholds a 72% success rate and garners 20.8% in his yearly returns. When recommending AMD, Ing earns 8.0% in average profits on the stock. When recommending NVDA, Ing gains 55.9% in average profits on the stock.

 

  • CPUsAreHistory

    AMD new GPU sells should positively impact AMD’s third quarter with the release of Polaris. Second quarter were good, but third quarter should be even better.

    • Dex4Sure

      Remember, NVIDIA more than likely is going to launch GTX 1080 Ti to counter any higher end AMD release. They did the same with GTX 780 Ti and GTX 980 Ti…

  • anubis44

    nVidia’s market share in gaming GPUs is inevitably on the decline. AMD owns the gaming market, as they already control >75% of it (consoles+PC), and the stats seem to indicate this is moving towards >90% AMD market share within the next two years. For example, AMD not only already controls the current crop of game consoles, they have also won the contracts for both Sony and Microsoft’s upcoming next generation consoles as well, and finally, AMD is not only well on it’s way back up to their historically ~50% market share in the PC, (having already increased from a low of 20% a year ago, to over 34% just recently), they are likely to keep going past 50% PC market share with the projected success of their next generation Zen-based APUs, which will also almost certainly take back large amounts of market share back from Intel, as well.

    This means game engine developers are optimizing their game engines for AMD’s Radeon architecture, and not nVidia’s architecture. Basically, AMD is winning the mass market/mainstream gaming market, and nVidia is increasingly being painted into a corner in the upper end, which is ironic, because nVidia’s architecture is behind AMD’s, missing key hardware components such as hardware schedulers and asynchronous compute engines.

    • cronin

      It’s unfortunate that you’re incorrect and AMD is still lacking in the scientific computing department.

      • Fleetwood

        Incorrect about what specifically? He or she was speaking in specifically just the gaming market. The GTX 1000 series is much more Maxwell on 16nm than anything new. Now that’s not necessarily a bad thing as long as they make sales. Although when it comes to ensuring longevity in the life of the card from a consumer’s view, it isn’t the best choice.

        As it stands AMD doesn’t have the R&D to compete in the Deep-Learning or HPC field. AMD’s best chances is to gain traction where it can compete which is in the Discrete GPU consumer market, licensing deals, SOC demand. Then once it can achieve a strong foothold, we can expect AMD to push in other areas.

        • David Wilson

          “GTX 1000 series is much more Maxwell on 16nm”

          Wow, the technical ignorance behind that comment is … astonishing. If you want to actually educate yourself before speaking, start with googling NVLink, dynamic load balancing, and unified memory.

      • anubis44

        It’s true that AMD is behind nVidia in terms of the software tools they have for scientific computing, but this is an easily corrected situation. I am confident that the new CEO will finally be putting resources into this, as it’s low-hanging fruit for boosting sales of professional GPUs.

    • David Wilson

      Umm … AMD has controlled console market for a long time now — indeed Nvidia consciously ceded it to them because the margins weren’t appealing — and this didn’t lead to AMD increasing their total market share, it led to a *decrease*.

      But I’m sure “this time it will be different.”

      • John Pombrio

        The Semi-Custom sales was the only bright spot in AMD’s Q2 financials. Q3 will be hit by AMD’s bribe to GloFlo to prevent them having to buy more wafers and to make them in another FAB. Q4 is the slack time for Semi-custom and I seriously doubt that Graphics sales will prevent the Gaming and CPU division from losing 10’s of millions more in the last two quarters. Then there is the up to 30% dilution of stock due to selling convertible bonds. AMD is going to have a rotten next couple of quarters, RX 480 sales or not.

  • MaxHoo

    too good to be true for an almost bankrupt company NOT too long ago.
    Bravo!

  • Benchen

    With any one of Samsung or Nintendo win will push Amd stock to $10. With Intel royalty will push
    It to $15. Plus zen , it will easily pass $30. A lot of good news on the way this year and next year.

  • John Pombrio

    The only “sub $200” graphics card AMD has on Amazon’s discrete graphics card best selling list is the $40 card at #23 and the RX 460 fro $140 at #63. AMD’s RX 470 is selling at $200 at #46, and the 1st AMD RX 480 card at #26 at $280. All are in stock, at the MSRP price, and with Prime. The top 25 cards are all NVidia’s new GTX 1070,1080,and 1060 cards: also all in stock, at MSRP, and with Prime (there goes the accusation of NV having shortages). So much for AMD’s quest at selling tons of cheap graphics cards.