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Advanced Micro Devices (AMD): The Bears Are Getting Nervous


Advanced Micro Devices’ (NASDAQ:AMD) stock surged 3% yesterday, after the chip giant was upgraded at Susquehanna, which cited significant improvements in the past two months.

Analyst Christopher Rolland upgraded his rating on AMD to Neutral, after downgrading the stock to Negative in March, leaving the bears defenseless. The analyst raised his stock price target to $11.00 (from $8.00), which still implies nearly 14% downside from current levels.

Rolland commented, “In March, we downgraded AMD as we attributed more than 20% of 1Q revenue to Ethereumrelated GPU shipments. Since then, a few changes have worked against our negative stance. First, the Ethereum ASIC we previewed from our Asia trip held 3x performance improvements, but fresh price hikes have destroyed its value proposition. Second, Ethereum prices have doubled in the last month, driving a (modest) reacceleration in GPU purchases. Third, AMD posted better than expected results, driven in part by non-mining products (Ryzen/Epyc). Fourth, the Street greatly reduced 3Q sequentials, now well below typical seasonality, de-risking some crypto headwinds…but much still remains. Lastly, Intel unexpectedly pushed out 10nm, which may allow AMD to compete at a similar process technology for the first time in decades. Price target increased to $11 (1.8x EV/2018 sales).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher Rolland has a yearly average return of 10.2% and a 68% success rate. Rolland has a -7.7% average return when recommending AMD, and is ranked #353 out of 4801 analysts.

Ultimately, Wall Street is not completely sure yet about this chip giant, but the optimists still win out in the bigger picture. Out of 17 analysts polled in the last 3 months, 9 rate a Buy on AMD, 6 maintain a Hold, while 2 issue a Sell. The 12-month average price target notably stands at $15.06, marking a potential upside of 17.5%.

As of this writing, AMD shares are trading at $12.72, down $0.10 or -0.78%.