Among techies, investors and analysts, there is excitement building around Advanced Micro Devices’ (AMD) impending launch of its new 7-nanometer (7nm) processing chips. For the first time since 2009, AMD will offer a processor with higher transistor density than Intel, which has been plagued with manufacturing delays on its 10-nanometer chip. While other companies have already released 7nm processors, including Apple in their newest iPhone models, AMD’s products will be geared towards the PC and server markets.
Cowen analyst Matt Ramsay is bullish on the potential of AMD’s 7-nm chip and the company’s prospects as a whole, rating the stock as Outperform with a $26 price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Matt Ramsay has a yearly average return of 21.8% and a 59% success rate. Ramsay has a 44.9% average return when recommending AMD, and is ranked #62 out of 5,108 analysts
Ramsay believes that “Intel’s Moore’s Law advantages have been largely eroded,” which “should open opportunities… (that could) materialize across AMD’s business and re-shift investor focus toward the longer-term opportunity.” The analyst adds that AMD’s new 7-nm chips “have the opportunity to take advantage of a performance/watt leadership position.”
The analyst expects “a full year of 7nm product introductions across the portfolio in 2019,” adding that the products “can have much higher performance and performance/watt versus today’s 14nm offerings.” Most importantly, Ramsay believes “another significant shift in the competitiveness of AMD’s products versus Intel’s will take place in 2019” which will leave “AMD at process node parity with Intel for the first time in well over a decade.”
While Ramsay is bullish on AMD for 2019, he cites a “crypto-related hangover” to present a “difficult set-up heading into” the first half of 2019, preventing overnight stock gains. But the analyst says this will be temporary and “does not impede AMD pushing towards mid-teens share of its target markets, significant earnings growth and margin expansion” over the next two years.
Wall Street is equally optimistic about AMD over the next year. The average price target of 24 analyst ratings tracked on TipRanks stands at $26.14, representing a 31% upside. Of the 24 analysts, 12 recommend Buy, 10 recommend Hold and two recommend Sell. (See AMD’s price targets and analyst ratings on TipRanks)