Advanced Micro Devices (NASDAQ:AMD) continues to snag new customers, and one of the most notable is networking equipment giant Cisco Systems, which is is now offering AMD’s EPYC 7000 series processors into its UCS series servers.
Industry research from Rosenblatt’s networking analyst, Ryan Koontz, supports the view that Cisco’s recent adoption of AMD EPYC is not a point product niche, but a company roadmap commitment that favors AMD’s CPU yearly cadence through 2022 over Intel’s (which has likely stalled at the moment).
Rosenblatt analyst Hans Mosesmann, who covers AMD since Feb 2017, believes that Cisco’s move to use AMD’s EPCY CPUs is not only a Good Housekeeping seal of approval in mainstream enterprise/datacenter computing, it is a multi-year strategic decision to adopt AMD’s EPYC roadmap of 7nm and beyond.
Mosesmann noted, “Our view is that Cisco believes there is an opportunity going forward in scaleout clustered workloads (with lots of cores, memory bandwidth, and I/O) that are increasingly becoming popular as organizations see better returns in shared resources (TCO), as long as configuration/reconfiguration can be done rapidly and easily […] Interestingly, Cisco positions its first EPYC-based UCS, the C125, as offering 128% more core density at rack level vs. its Intel offerings and 71% more than its Intel blade offerings. Cisco’s move to a Rome based 7nm EPYC next year, for example, would take its 2U core density up by 50% from 256 cores to 384 cores.”
Net net, Mosesmann rates AMD shares a Buy, with a price target of $27, which implies an upside of 80% from current levels. (To watch Mosesmann’s track record, click here)
TipRanks points to caution when it comes to AMD, with the Street divided on whether to be bullish, sidelined, or bearish on this chip giant. Out of 17 analysts polled in the last 3 months, 7 rate a Buy on AMD stock, 7 issue a Hold, while 3 recommend 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 a slight upside potential on nearly 5%, with the 12-month average price target standing at $15.67.