Advanced Micro Devices (NASDAQ:AMD) investors’ optimism is centered on the fact that in the second-quarter, AMD’s Computing and Graphics segment, which includes desktop and notebook processors and chipsets, accounted for more than 60% of revenues, and grew almost 64% year over year to $1.09 billion. AMD’s popular Radeon graphics card did much of the heavy lifting, while growth from the Ryzen processor was encouraging.
This week, as part of BMO’s 2018 Tech Tour, analyst Ambrish Srivastava hosted a meeting with AMD’s management team with a focus on the computing and graphics business and share gains in computing.
Srivastava commented, “Our discussions were largely focused around the Computing and Graphics business group. However, the company continues to appear very confident in achieving its server target of mid-single digit of a 20 million unit TAM by 4Q18, with further share gains to double digits four to six quarters later.”
With respect to the compute roadmap, “The company believes it is making solid traction with both Ryzen and EPYC product portfolios. Regarding Ryzen, it believes that the launch of Ryzen Desktop and Mobile has opened up much of the $30 billion compute TAM, up from the ~$10 billion previously addressable. Mobile, which launched at the end of last year, experienced unit growth of >2x between 1Q and 2Q. The company is currently sampling its 7 nm Rome server products, which are expected to launch sometime next year.”
With respect to the graphics roadmap, “The company is currently sampling 7 nm Vega products, and is expecting to launch volume production later this year. Beyond this, the company will launch Navi, although the company did not offer much color on timing for this program. The company indicated that it will have ray tracing capability as well, but will mostly be software assisted, compared to a real-time, hardware driven solution from NVIDIA.”
Net net, Srivastava reiterates a Market Perform rating on AMD stock, with a price target of $14, which implies a downside of 42% from current levels. (To watch Srivastava’s track record, click here)
TipRanks suggests caution has Wall Street fairly divided in its expectations on AMD. Out of 20 analysts polled in the last 3 months, the bulls rule the majority, with 10 rating a Buy on the chip titan, 8 maintaining a Hold, and 2 issuing a Sell.