Advanced Micro Devices (AMD) Makes the Street Go Wild; Rosenblatt Analyst Reiterates Buy on the Stock


Can you feel the ground moving beneath your feet? Shares of Advanced Micro Devices (NYSE:AMD) skyrocketed nearly 15% today after the chip giant delivered second-quarter results that crushed Wall Street’s expectations in an upside surprise. The shake, rattle and roll generated by last night’s earnings report impressed, and in some cases silenced, some big bears.

Rosenblatt analyst Hans Mosesmann, one of AMD’s biggest bulls, is not surprised at all. The analyst reiterates a Buy rating on the stock, with a price target of $27, which represents a potential upside of 48% from where the stock is currently trading. (To watch Mosesmann’s track record, click here)

Mosesmann wrote, “Another strong quarter of execution with mounting evidence that AMD is indeed on its way to mid-single digit server market share in 4Q18, with an order pipeline driven by 5 of the top 7 mega data center players. We see AMD gaining CPU share in all segments of the x86 CPU market for the next couple of years with the interesting move to 7nm in 2019 setting the stage to break AMD’s alltime share of ~25% in 2006. AMD’s 2H18 guide effectively de-risks crypto/ blockchain from the model. Lastly, gross margins will continue to have an upward trajectory as more of the company’s sales mix is Ryzen/EPYC, which we see as a multi-year dynamic.”

“Our 3Q18 sales and non-GAAP EPS estimates move to $1.7 billion and $0.12, down from $1.8 billion and $0.14, respectively. Our 2018 sales and non-GAAP estimates move to $6.8 billion and $0.48, down from $7.1 billion and $0.54, respectively. For 2019 our sales and non-GAAP estimates move to $7.9 billion and $0.85, down from $8.2 billion and $1.00, respectively,” the analyst added.

In the bigger picture, AMD stock has a cautiously optimistic Moderate Buy rating from Wall Street analysts. The stock has received 8 Buy ratings in the last three months. This is versus 7 Hold ratings and 1 Sell rating. However, according to TipRanks, the average 12-month price target on the stock is $17.50, which represents a 5% downside from current levels. 

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