Billionaire “Izzy” Englander is living the authentic American dream these days, having realized riches to the tune of $5.2 billion from a humble start as the son of Polish immigrant parents. In Englander’s latest Q3 moves, one theme becomes clear: Advanced Micro Devices, Inc. (NASDAQ:AMD) does not hold the same value to the guru as does Micron Technology, Inc. (NASDAQ:MU) when it comes to these two leading chip giants in the tech-verse.
Behind-the-scenes long before these savvy tech trades, the Wall Street success first graduated from New York University before founding his gains-maker hedge fund Millennium Management. Fast forward to 28 years later, Englander’s Millennium has burst like a rocket from $35 million to an impressive $34 billion total in assets. This hedge fund manager grasps the art of sizing up the bigger Wall Street picture as Millennium’s whiz trades outclass most competitors in the game of the trade.
Just how much more bullish is Englander on Micron than he is on AMD? Let’s take a closer look:
AMD Bears the Brunt of a $44 Million+ Slice
AMD is not looking as hot to these days by Englander’s Street-wise understanding, as the billionaire has led his firm to cut its stake in the chip giant by a sharp 3,460,573 shares worth $44,122,208. In other words, this means Englander dialed back on his position by almost half, leaving 3,900,087 shares worth $49,726,000.
On Tuesday, AMD and Microsoft revealed a new collaboration among these two tech empires, with Microsoft Azure utilizing AMD’s EPYC server microprocessors in the first ever worldwide public cloud instances to adopt AMD’s powerhouse new server processor. Microsoft’s L-Series of Virtual Machines will deploy AMD’s EPYC line for storage optimized workloads that rely on high bandwidth.
As AMD tries to gain footing in a server CPU market currently under rival Intel’s reign, this deal marks a meaningful victory for AMD’s EPYC for a big public cloud deployment stride forward. This is part of Microsoft’s Project Olympus, a next-generation open-source cloud hardware design that with AMD’s efforts will propel the cloud platform forward. It is not that AMD marks the sole server microprocessor in the scope of Olympus, but notably, the chip giant is so far the only one to attract a deployment from the Microsoft team.
Director of compute for Microsoft Azure Corey Sanders cheered in a statement for AMD: “We think Project Olympus will be the basis for future innovation between Microsoft and AMD, and we look forward to adding more instance types in the future benefiting from the core density, memory bandwidth and I/O capabilities of AMD EPYC processors.”
Overall, however, TipRanks points to caution when it comes to Advanced Micro Devices, with the Street divided on whether to be bullish, sidelined, or bearish on this semiconductor player. Out of 20 analysts polled by TipRanks in the last 3 months, 8 rate a Buy on AMD stock, 8 maintain a Hold, while 4 issue a Sell. When considering if this stock is an overvalued or undervalued contender in the market, it is worthy of note that analyst expectations indicate nearly 47% return potential, with the 12-month average price target standing at $14.68.
“Izzy” Sweetens Micron Position in a Big $88 Million Boost
Micron looks far more promising to Englander, who added 2,237,534 shares worth $88,002,243 to Millennium’s table. After the latest SEC filing, Englander’s Millennium now boasts 10,631,270 shares worth $418,128,00, indicating a 27% jump in value.
However, Englander might have been gritting his teeth last week when NAND fears hit the Street, sending investors in the chip-verse running for the hills. Even though Morgan Stanley analyst Kathryn Huberty never called out Micron by name, she downgraded the company’s rival Western Digital, warning NAND prices have hit their limit. By Huberty’s calculation, NAND prices could dip from 7% to as low as 15% each quarter starting with the first quarter of next year.
However, Morgan Stanley analyst Joseph Moore makes a case for Micron, defending last week’s share weakness of 12% as a compelling chance to buy into the stock: “NAND is less than one third of the business at Micron. (It has 20 points less gross margin than DRAM, also, so it contributes much less than one third of profits – however, this can be misleading, as a lost point of margin on one third of the business has the same impact no matter what the starting point.) […] Micron is down over 10% since then, due to several factors: our global call, a selloff in tech YTD outperformers across the board including names that have nothing to do with memory, and a few unsurprising data points on potential for NAND supply loosening up early next year (MRVL commentary, DRAM-exchange commentary). We stand by our NAND comments, which saw some pushback, but feel strongly that DRAM should remain strong, that Micron should have significant earnings growth potential from here, and that this pullback is an opportunity.”
In fact, the analyst in reaction reiterated a Buy rating on the stock while bumping up the price target from $39 to $55, which represents a just under 31% increase from current levels. (To watch Moore’s track record, click here)
Semiconductor Advisors analyst Robert Maire likewise backs the opportunity to buy into the pullback seen in Micron, dismissing skittish investor sentiment as simply a “knee jerk” response hinging on a “perceived” apprehension with regard to waning NAND prices. “Anything related to memory is radioactive,” Maire argues.
Ultimately, the verdict among investors loudly aligns with Englander’s bullish quarterly play, as TipRanks shows a strong bullish consensus from Wall Street when it comes to this chip giant’s opportunity. The voice of the majority goes to Micron, with 22 of 24 analysts polled in the last 3 months rating a Buy on the stock and just 2 maintaining a Hold. The 12-month average price target stands at $53.48, marking a nearly 29% upside from where the stock is currently trading.