Rosenblatt’s Bullish Bet: Advanced Micro Devices, Inc. (AMD) Poised to Amass Market Share and Has Winning Advantage Over Rival Intel

Hans Mosesmann: AMD has leverage in mobile, servers, and processor roadmaps.


Advanced Micro Devices, Inc. (NASDAQ:AMD) shares are flying just under 6% after the company has revealed the design of a semi-custom graphics processor unit (GPU), one that will find integration into a new Intel Core multi-chip processor package.

Rosenblatt analyst Hans Mosesmann is out with a bullish note surveying the semiconductor industry following last week’s round of earnings from both AMD and rival Intel alike, giving the advantage to AMD when glancing to the chip maker battleground. With AMD’s Computing & Graphics segment poised to surge roughly $1 billion, which would suggest around 50% year-over-year growth this year considering last year’s $1.97 billion posted, the analyst is confident: “AMD is set to gain share.”

The analyst reiterates a Buy rating on AMD stock with a $22 price target, which represents a close to 87% increase from current levels. (To watch Mosesmann’s track record, click here)

Among key themes and insights from the analyst’s latest investor discussions, Mosemann highlights that among AMD’s gains forthcoming at “the early stages of a multi-year dynamic (yes, $TAM and units),” the company gleans a clear “graphics advantage in mobile” as well as a “structural advantage in servers, and processor roadmaps.”

If this chip giant is in such strong standing heading into the new year, the analyst poses the following question: “Why have AMD shares been under pressure since 3Q17 earnings?” Well, “It appears that while AMD is beating and raising estimates consistent with sell-side models, buy-side models have been way too aggressive,” writes Mosesmann who notes that with a new CPU in desktop, notebook, as well as server markets, it takes time for that ramp- “many quarters,” in fact.

Mosesmann concludes on an enthusiastic note giving the competitive upper hand to AMD over Intel with its EPYC standing: “Intel’s CPU portfolio vs. AMD is best positioned in desktops, less so in mobile, and even less so in servers.” Whereas Intel’s servers operate on a pricing structure fixated largely on elevated costs for CPUs carrying “more feature sets” from PCIe lanes to memory bandwidth, “AMD disrupts this price segmentation by offering high-end feature sets in the entire range of EPYC servers; hence a customer can get high end feature sets at a low price points. Given how workloads have shifted over the last couple of years in terms of machine learning and AI, low-end CPUs with the ability of attaching many GPU accelerators for example is decidedly advantageous to AMD’s EPYC positioning.”

While this bull believes the semiconductor player is in solid fighting stance in the chip maker arena, Wall Street is less convinced that the giant is one worth the clear-cut bet, as TipRanks analytics exhibit AMD as a Hold. Based on 21 analysts polled by TipRanks in the last 3 months, 8 rate a Buy on Advanced Micro Devices stock, 9 maintain a Hold, while 4 issue a Sell on the stock. The 12-month average price target stands at $14.52, marking a 24% upside from where the stock is currently trading.