Two of the best-performing analysts on Wall Street are positive on chip giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and Skyworks Solutions Inc (NASDAQ:SWKS). Though one analyst notes AMD has experienced recent share surges and volatile swings, there are various drivers waiting in the wings that have earned his surefire conviction in the stock. Meanwhile, Skyworks has the analyst watchful on the near-term, but encouraged on promising long-term possibilities. Let’s take a closer look:
Advanced Micro Devices, Inc.
Top analyst Matt Ramsay at Canaccord is diving into AMD after hosting investor meetings early last month in New York and Boston with EVP and GM of the Enterprise, Embedded and Semi-Custom business at AMD Forrest Norrod as well as with Corporate VP of Investor Relations Ruth Cotter.
With bolstered belief in the chip giant’s CPU and GPU roadmaps, rising gross margin, and in 14nm yields and the 7nm process roadmaps at key foundry partners, the analyst reiterates a Buy rating on shares of AMD while boosting the price target to $13, which represents a 24% increase from where the stock is currently trading.
Recently, AMD shares have been on “quite the ride” with shares having surged 60% from the time Ramsay last held these investor meetings, and the momentum has no end in sight. Particularly, the analyst notes his bullishness continues to ride the positive tide with the chip giant announcing deeper insight into its GPU server acceleration strategy. AMD’s approach will bring forth new Radeon Instinct products. Moreover, the analyst additionally notes “initial wins with Alibaba and Google” among further details regarding Zen CPU performance and the forthcoming launch of Ryzen in the first quarter of 2017.
“With several catalysts yet to come, our BUY thesis on AMD shares remains intact despite the recent stock appreciation and volatility, and we continue to gain confidence in 1) AMD re-emerging as a competitive second source to Intel with an on-track Zen roadmap across relevant x86 CPU markets, 2) gradual unit share recovery in lower GPU market tiers with Polaris should be supplemented by the Vega launch in discrete GPUs with ASPs trending higher for both AMD and market leader NVIDIA, and 3) ramping gaming console revenue with stronger ASPs given AMD’s unique position with key partners Microsoft and Sony with 4K/VR gaming increasing console hardware refresh rates,” Ramsay surmises.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Matt Ramsay has achieved a high ranking of #67 out of 4,285 analysts. Ramsay upholds a 64% success rate and garners 16.5% in his annual returns. When recommending AMD, Ramsay gains 61.2% in average profits on the stock.
TipRanks analytics indicate AMD as a Buy. Out of 15 analysts polled by TipRanks in the last 3 months, 7 are bullish on AMD stock, 7 remain sidelined, and 1 is bearish on the stock. With a loss potential of nearly 25%, the stock’s consensus target price stands at $7.93.
Skyworks Solutions Inc
Though Skyworks is still a bullish pick for top analyst Michael Walkley at Canaccord, he is cautious on the chip giant’s near-term. Considering Walkley’s opinion that iPhone sales in North America have become more slugging following the first robust sales in the weeks trailing the launch, he has slightly reigned in his March quarter iPhone sales projection from 56 million to 53 million units and has taken his June quarter iPhone forecast in from 46 million to 44 million units.
Additionally, Walkley notes, “Combined with our lowered iPhone estimates, we also believe smartphone inventory levels are building in China ahead of an earlier Chinese New Year and anticipate weaker sell-in trends during the March quarter and have thus updated our seasonal sales estimates for Skyworks.”
However, the analyst stays the course for SWKS’s long-term prospects, concluding, “We believe the RF TAM for smartphones remains a growth market for the next several years due to increasing mix of LTE, carrier aggregation, 5-mode versus 3-mode in China, and other positive growth trends. Further, we believe Skyworks’ diverse analog portfolio positions its broad market division for double-digit annual growth driven by content share in markets such as 802.11ac, automotive, and the IoT markets. Finally, we anticipate strong iPhone 8 sales combined with improved Skyworks inventory levels for Apple products should drive strong earnings growth through C2018.”
As such, the analyst reiterates a Buy rating on SWKS with a price target of $92, which represents a just under 20% increase from where the shares last closed.
Michael Walkley has a very good TipRanks score with a 63% success rate and he stands at #31 out of 4,285 analysts. Walkley realizes 14.8% in his yearly returns. When suggesting SWKS, Walkley yields 34.8% in average profits on the stock.
TipRanks analytics demonstrate SWKS as a Buy. Based on 11 analysts polled in the last 3 months, 8 rate a Buy on SWKS while 3 maintain a Hold. The 12-month average price target stands at $88.44, marking a 15% upside from where the stock is currently trading.