Advanced Micro Devices, Inc. (NASDAQ:AMD) and Microsoft Corporation (NASDAQ:MSFT) are captivating the tech world these days. AMD investors are eager to hear what the chip giant has to present tomorrow during its Investor Day conference and Microsoft investors continue to process one week later all the new milestones and product announcements served at the software giant’s Build conference last week.
Rosenblatt takes a more confident approach, dismissing the Street for failing to recognize AMD is on track to beat its arch-rival Intel with is x86 queue, finding that history stands on AMD’s side. While one of Wall Street’s best performing analysts does find promise following Microsoft’s Build conference, acknowledging he is that much closer to upgrading the stock to a Buy rating, he remains cautiously optimistic until long-term prospects fully convert him to the bull case. Let’s dive in:
AMD Approaching Uncharted Territory
AMD is gearing up to host its 2017 Investor Day conference tomorrow in Silicon Valley and Rosenblatt analyst Hans Mosesmann is bullish in his preview, forecasting that the chip giant will be capturing even more market share moving forward. Ahead of the conference, Mosesmann anticipates “an eye opener,” especially pinpointing “the best-in-company-history Zen x86 CPU line-up.”
Therefore, the analyst reiterates a Buy rating on shares of AMD with a $20 price target, which represents a close to 78% increase from where the stock is currently trading.
Looking back, “History can be useful to gauge AMD’s potential in the current Zen cycle,” the analyst highlights. Measuring AMD up against its competitor Intel, Mosesmann adds, “Indeed, AMD between 2001 and 2012 enjoyed high-teens overall x86 CPU unit share peaking at ~25% share in 2006. This is rather remarkable given that AMD’s portfolio back then was competitive not necessarily better to Intel’s (INTC: Sell) x86 CPU line-up.” A
Against the bears who believe it a pipedream for the chip giant to steal market share at all, as they are not confident in AMD’s Ryzen, with Intel beating AMD out amongst the gaming standard, Mosesmann argues otherwise. “We believe AMD may have a better multithreaded architecture than Intel’s current x86 and this notion has serious implications in the datacenter where we are already seeing the disruption AI workloads are doing to system level architectures,” opines the analyst, venturing that by 2018, AMD will outclass Intel in x86 roadmaps.
Ultimately, AMD is being massively underestimated, Mosesmann asserts, contending, “The street has yet to realize the significant market share upside going forward on the notion of AMD just getting back to historical share levels with merely a competitive product. If AMD were to have a better x86 CPU architecture, well then, we would be headed into uncharted territory.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Hans Mosesmann is ranked #439 out of 4,561 analysts. Mosesmann has a 57% success rate and earns 10.3% in his annual returns. However, when recommending AMD, Mosesmann loses 24.4% in average profits on the stock.
TipRanks analytics show AMD as a Buy. Out of 15 analysts polled by TipRanks in the last 3 months, 6 are bullish on AMD stock, 7 remain sidelined, and 2 are bearish on the stock. With a return potential of 12%, the stock’s consensus target price stands at $12.64.
Microsoft Still Needs to Show Long-Term Can Impress
Microsoft’s Build Conference last week in Seattle appealed to thousands of developers and dozens of financial enthusiasts alike, announcing: Windows 10 has now shot past 500 million users; Azure AI programming is getting a simplified upgrade; favorite app development tool Visual Studio will now be available for Macs; and new partnerships are on the horizon with HP and Intel, with the software giant launching Cortana-powered Bluetooth speakers. In other words, beware Google Home and watch out Amazon Echo- Microsoft is pulling out all the punches.
Yet, top analyst Richard Davis at Canaccord still needs to see more from the giant before getting bullish on the stock. Though the analyst appreciates the “signal emerging from the noise,” acknowledging, “we are closer to a Buy rating,” for now, he reiterates a Hold rating on MSFT with a price target of $68, which represents a just under 1% downside from where the shares last closed.
“The Build Conference was a fact finding effort on our part. We acquired plenty of support for our thesis that Microsoft is well positioned in a world in which developers have more influence, and therefore monetary value to software vendors. While tactically, it seems that some people wanted at least a gesture toward a longer-term guide up, this seems like hopeful overreach in the ‘guide conservatively’ Amy Hood regime. For now at least we have stayed with our HOLD rating, pending either a correction in the stock, or more likely a more completely reasoned assessment on our part of the long-term translation of a re-energized developer community into market share expansion, revenue and profit growth,” Davis surmises, although he praises the “improved Cortanta speech functionality and hardware partner availability” along with the giant’s new “slick translation tool” brought to the table.
Richard Davis has a very good TipRanks score with a 75% success rate and a high ranking of #4 out of 4,561 analysts. Davis yields 23.2% in his yearly returns. When recommending MSFT, Davis realizes 0.0% in average profits on the stock.
TipRanks analytics demonstrate MSFT as a Strong Buy. Based on 16 analysts polled by TipRanks in the last 3 months, 14 rate a Buy on Microsoft stock, 1 maintains a Hold, while 1 issues a Sell. The 12-month average price target stands at $73.71, marking a nearly 8% upside from where the stock is currently trading.