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Gettin’ Chippy — Semiconductor Stocks Hammered, but Analyst Expects Advanced Micro Devices (AMD) Stock to Nearly Double


Advanced Micro Devices (AMD) has had quite the year. The company’s stock had increased by more than 200% between April and September, before plummeting by nearly 50% in October. Since then, the company is up more than 25%, which is no fluke according to Rosenblatt analyst Hans Mosesmann. Mosesmann reiterates his Buy rating and expects the stock to rise to $40 in the upcoming 12 months, representing a tremendous 87% upside. (To watch Mosesmann’s track record, click here)

Excluding the demise of AMD’s crypto-mining business, revenue growth remained healthy, powered by stronger demand for the company’s Ryzen chips. The Ryzen line would let AMD become a legitimate competitor to Intel, not just an alternative for lower-priced desktops and notebooks.

Indeed, Mosesmann believes AMD’s Ryzen CPU momentum will continue to propel the company forward. Mosesmann increased his Q4 segment revenue estimate by $80 million, but stresses “AMD’s competitive advantage is pronounced in mobile relative to desktop due to efficiency and superior integrated graphics”.

The analyst’s $80 million increase to AMD’s CPU segment is offset by an $80 million decrease in his estimate for the company’s game console and crypto segment. The analyst cites “Nvidia’s commentary recently on crypto GPU related inventories in the channel” for the adjustment, but maintains his total revenue estimate for AMD.

“Our EPYC CPU estimates remain unchanged and believe AMD is in position to exit 2018 with mid-single digit unit share and on the road of double digit share exiting 2019 as 7nm-based EPYC2 (Rome), starts to ramp in 2Q18 with impact to 2H19,” the analyst added.

TipRanks suggests optimism with some caution baked into expectations when it comes to Wall Street’s majority perspective on the chip giant. Out of 24 analysts polled in the last 3 months, 12 rate AMD a Buy, 10 maintain Hold, while only 2 recommend Sell. The 12-month average price target stands at $26.14, marking nearly 29% in upside potential from where the stock is currently trading. (See AMD’s price targets and analyst ratings on TipRanks)