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.