Oppenheimer analyst Rick Schafer continues to play it safe, hedging his bets on chip giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA) following last week’s close of an Asia tour. With regards to the tone on back of a first quarter for the semi-conductor industry, the analyst assesses one that rings as “cautiously optimistic, with few surprises.” Therefore, while encouraged on the giants’ prospects, the analyst surveys from the sidelines, reiterating a Perform rating on shares of AMD as well as a Perform rating on NVDA without listing a price target for either.
Schafer notes, “AMD’s products appear more competitive than witnessed in recent years; however, we believe it is still early to gauge how meaningful any share gains will be (in CPUs and GPUs respectively). […] AMD’s Naples server CPU appears to be a 2018 driver at earliest. Most see memory pricing trending higher through the year.”
With regards to the PC arena, “While NT channel inventory concerns some, all of our checks forecast units (DT/NB) flattish in 2017, a marked improvement from the nearly 10% annual declines witnessed the past couple of years. AMD’s Ryzen CPU appears competitive and could drive 2Q share gains assuming a clean ramp. AMD’s Vega GPU appears on track for 2Q launch; however, we see NVDA maintaining its high-end share/dominance,” continues the analyst, spotlighting strength for the giants that could be an asset in the second quarter, despite near-term investor apprehension.
Ultimately, “Net, datapoints support our view that the semiconductor group is moving through the middle innings of the current up-cycle. We remain stock selective, focused on names with the best growth and/or FCF/return profiles […]” concludes Schafer, who does not include AMD nor NVDA at the top of his list, but keeps a positive forward glance in their direction.
Rick Schafer has a very good TipRanks score with a 72% success rate and a high ranking of #45 out of 4,557 analysts. Schafer garners 16.7% in his annual returns. However, when recommending AMD, Schafer forfeits 50.3% in average profits on the stock. When recommending NVDA, Schafer earns 0.0% in average profits on the stock.
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