Advanced Micro Devices, Inc. (AMD) Has More Attractive Risk/Reward Prospects Than Intel Corporation (INTC): Top Analyst

Canaccord's Matt Ramsay is bullish in his 3Q preview of AMD, but continues to be apprehensive on INTC.


If top analyst Matt Ramsay at Canaccord were to play favorites on semiconductor stocks,¬†Advanced Micro Devices, Inc. (NASDAQ:AMD) takes the cake, with Intel Corporation (NASDAQ:INTC) left in AMD’s dust. Though both stocks circle respective risks as well as offer compelling rewards, for Ramsay, AMD’s risk/reward is the better deal at the end of the day, leaving him less than confident on Intel- even though the shares are not expensive.

Matt Ramsay has a very good TipRanks score with a 68% success rate and a high ranking of #57 out of 4,698 analysts. Ramsay realizes 25.6% in his annual returns. When suggesting AMD, Ramsay yields 58.4% in average profits on the stock. When recommending INTC, Ramsay garners 16.7%.

Let’s take a closer look at what one of Wall Street’s best performing analysts finds so impressive about AMD and what has him stopped in his tracks still on Intel:

AMD Vega Underwhelms a Bit, But Cryptocurrency Demand to Snag Upside

AMD is looking enticing ahead of its third quarter print due next Tuesday in the eyes of Ramsay, who has been a bull on this chip giant for well over a year now. Especially as momentum’s flames keep fanning for Ryzen desktop and the company’s EYPC server product lines alike, the analyst continues to expect long-term gains for the semiconductor player.

Therefore, in a confident earnings preview, the analyst reiterates a Buy rating on AMD stock with a price target of $20, which represents a just under 44% increase from current levels.

For bears who doubt AMD’s Vega GPUs, Ramsay says not to worry: “strong cryptocurrency GPU demand should overcome modestly disappointing power/performance metrics from new Vega GPUs against tight product supply, with reasonable expectations set for the Q4/17 Ryzen Mobile launch and a strong overall roadmap moving to 7nm across the portfolio during 2018.”

Ramsay continues, “While we raise our Q3/Q4 estimates slightly above consensus due to cryptocurrency GPU demand and remain well above consensus for 2H/18 and for long-term AMD revenue and earnings estimates, we anticipate a more gradual EPYC server revenue ramp over the first few quarters despite positive industry feedback and now deeper engagements with both Google and Facebook and remind investors that further near-term share count inflation from convertible debt remains likely. Finally, our industry checks indicate 7nm chip development timelines remain intact for what should prove even stronger products across AMD’s roadmap versus Intel during 2H/18 and 2019.”

The bigger picture may include some level of risk factor when the analyst takes under account roadmap execution as well as relentless competition in the chip making sphere, but overall, risk/reward points to upside for this semiconductor contender.

Wall Street is not as surefire positive as Ramsay, but is largely upbeat, considering TipRanks indicates AMD as a Buy. Out of 18 analysts polled by TipRanks in the last 3 months, 8 are bullish on AMD stock, 7 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 4%, the stock’s consensus target price stands at $14.44.¬†

Intel Investors Still Need to See Investments Can Show Stellar Returns

Ramsay has surveyed Intel from the sidelines ever since he stepped away from the bulls back in February, and continues to have less conviction than consensus on Intel’s prospects, anticipating a “modest” secular dip and sub-10% year. Additionally, though the chip giant saw a sturdy second and third quarter performance in the second and third quarter, the analyst worries this could leave the company at risk for a prospectively “weaker” fourth quarter.

Though for the short-term, the analyst opines, “the Core X-series of desktop processors, first CoffeeLake notebook chips and the Purley/Skylake server platform are impressive and incrementally expand the breadth of Intel’s portfolio at the high end of its served markets,” for now, he maintains a Hold rating on INTC stock with a $38 price target, which implies a 5% downside from where the stock is currently trading.

For the year, the analyst forecasts PC sales to wind down around 0.3%, increasing the downturn to roughly 3.2% by next year when the total addressable market (TAM) seems predominantly “flat” when trying to tackle fresh rivalry heading the company’s way from Intel. Moreover, the analyst projects 6.8% in Data Center growth for this year and 7.9% by next year, which are both under the INTC team’s “low-double-digit long-term target.”

It seems to be a mixed bag for this semiconductor stock: “Driven by the launch of certain CoffeeLake notebook products and the Purley server platform, we anticipate stronger 2H/17 results for Intel overall and improved DCG operating margins versus 1H/17. However, while we concede Intel shares generate a strong yield and remain inexpensive, we believe the recent stock appreciation is premature and shares could retrench and remain range bound until investors see proof investments in 10/7nm, FPGAs, auto, IoT and memory will generate strong returns within a reasonable time horizon and margin structure,” surmises Ramsay.

Wall Street is also playing it safe on Intel, as TipRanks demonstrates INTC as a Buy. Based on 22 analysts polled by TipRanks in the last 3 months, 10 rate a Buy on Intel stock, 9 maintain a Hold, while 3 issue a Sell on the stock. The 12-month average price target stands at $39.78.

  • CPUsAreHistory

    Crypto currency was not considered in AMD’s Lisa future earnings for Q3, since she was very conservative in all areas.

    AMD has released Ryzen 7,5,3, Vega RX, Pro FE, SSG, WX9100, syngle and double socket EPYC server models, a great ThreadRipper workstation monster, MI-Instinct (AI), new embedded hardware, and will be releasing its powerful RyZen/Vega APU in Q4.. not counting Atari, XBox, Sony PlayStation, Licensing, etc..

    All the latter this year (2107).. AMD sales are a complete success in Europe and around the world.

    Crypto is just a cherry in the pie. AMD has huge growth to come with their new 12 nm high-performance RyZen coming on February 2018 and then 7 nm chips coming on 2018 with enhanced features, then Navi high-performance scalable GPus which are going to be significanlty better than Vega.. and Vega Pro is doing great in the professional area.

    Doomers lost AMD’s 600% stock gain last year.. Lots of AMD doomer article and at the end, only the doomers and the naive investors lost money.

    AMD took 4 to 5 years to prepare one of the most historical success returns of a technical company.. AMD return with not only new CPUs but with new GPUs and new APUs..

    AMD over the past 4 to 5 years, it recoiled to come with an angry response to a monopolistic Intel. AMD had to come with all the CPU guns and with guns that Intel doesn’t even have, which are high-end GPUs and APUs..

    Intel is a dying company without high-end GPUs.. VR, AR, AI, graphics, visualization, etc.. all need the massive parallel GPu derived architectures, and all of them from a processor that can combined all these processor types into a single one. i.e. AMD’s HSA APUs which combines cpu cores, gpu cores, and in the near future Tensor Cores, FPGA’s, etc.. all in an economical and incredibly powerful single APU package..

    Intel AI solutions are not generic and is not an HSA architecture like the newer generation architectures from APPLE, Samsung, Qualcomm, AMD, etc..

    AMD earning for Q3 are going to be great, and the following quarters are going to be of an incredible market share and profit growth..

    AMD as a CPU only company is a $30 to $40 dollars, as a CPU and GPU company is a $40 to $60 dollars, and as a CPU, GPU, APU unique company with servers, computing, AI, VR, AR, gaming consoles, embedded, etc.. it will be around $100 to $180 within 5 years.. Just NVIDIA being only a GPU company is already a $190..

    Intel being just a CPU company is not going to be able to compete and will be losing at least 50% of its market share since AMD is back with great products.