Last week, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced a partnership with Alibaba Group Holding Ltd (NYSE:BABA) to do research to deploy AMD GPUs in Alibaba’s Cloud services offering, which marks the company’s third deal announced this year with China-based companies.
Also noting April announcements of an IP deal with China-based THATIC, for IP around developing SoC’s for the China server market and joint venture with Nanton Fujitsu for various Asia-based assembly, test, mark, and pack facilities, Jefferies top analyst Mark Lipacis believes “more are in the work.”
On back of the newest BABA deal and with the expectation for further progress in China, the analyst remains bullish on the semiconductor giant, reiterating a Buy rating on AMD with a price target of $9.00, which represents a nearly 31% upside from where the shares last closed.
Lipacis opines, “Our own checks indicate AMD’s Zen Server MPU is gaining traction with China hyperscale players.”
“AMD has articulated a strategy to monetize its IP through patent/tech licensing and partnerships, with a particular focus on areas of low penetration – which we think is code for ‘China.’ We think AMD is working on more China deals, and we expect more announcements over the next 6-to-12 months,” Lipacis concludes.
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 Mark Lipacis has achieved a high ranking of #11 out of 4,180 analysts. Lipacis upholds a 79% success rate and realizes 22.3% in his yearly returns. When recommending AMD, Lipacis yields 21.6% in average profits on the stock.
TipRanks analytics indicate AMD as a Hold. Based on 17 analysts polled in the last 3 months, 4 rate a Buy on AMD, 10 maintain a Hold, while 3 issue a Sell. The consensus price target stands at $6.05, marking an 11% downside from where the stock is currently trading.