Advanced Micro Devices (AMD) Stock: Next Stop, $40?

With all the media buzz surrounding NVIDIA’s brand spanking new graphics cards over the past couple of weeks, a similarly exciting news story on Advanced Micro Devices’ (AMD) side has seemingly flown under the radar. The chip giant recently announced that it’s on track to launch the world’s first 7nm graphics cards this year:

AMD’s next major milestone is the introduction of our upcoming 7nm product portfolio, including the initial products with our second generation “Zen 2” CPU core and our new “Navi” GPU architecture. We have already taped out multiple 7nm products at TSMC, including our first 7nm GPU planned to launch later this year and our first 7nm server CPU that we plan to launch in 2019

In reaction, as a sign of confidence in AMD, Rosenblatt analyst Hans Mosesmann is raising his price target for the chip giant’s stock from $30 to $40, while reiterating a Buy rating. The new price target implies nearly 34% upside from current levels. (To watch Mosesmann’s track record, click here)

Rosenblatt commented, “AMD’s situation to us is more interesting given that AMD has not really played meaningfully in GPU compute (AI training and inference), and with the recent sampling of TSMC-based 7nm Radeon GPUs (6-12 months ahead of Nvidia), the dynamic suggests a faster than street expectations (if even existent), in 2019 […] The above dynamic suggests to us that AMD’s pre-emptive thrust with its 7nm GPU compute offerings (ramping in 1Q18 and 1-2 quarters ahead of AMD’s own 7nm-based EPYC2 CPUs), is a ramp that could mirror or improve on the current overall EPYC CPU ramp (5% share 12-18 months from launch and 10% ~12 months later), for 2019/20.”

“We raise our price target for AMD to $40 from $30 on a faster ramp in 7nm GPU compute (datacenter), while positioning our move today for mid-to-longer term investors. AMD’s move over the past several quarters and going forward reminds us of the setup we witnessed with NVDA nearly 3-years ago when that company transformed from a PC graphics play to a compute powerhouse,” the analyst concluded.

TipRanks exhibits the chip giant has Wall Street evenly split between the bulls and those choosing to play it safe. Based on 20 analysts polled in the last 3 months, 9 rate a Buy on AMD stock, 9 maintain a Hold, while 2 issue a Sell. Notably, the 12-month average price target stands at $22.00, marking a nearly 26% downside for the stock. (See AMD’s price targets and analyst ratings on TipRanks)

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