Advanced Micro Devices (AMD) has had quite the first half to the year. Its stock has skyrocketed 61% higher as the company continues to show its technological prowess by upgrading its products, unveiling new ones and showing the tech world that it is a force to be reckoned with. For example, in May AMD announced its new line of Ryzen 7nm processors (set to launch next week), of which the 16-core 3950x has demolished its Intel counterpart in a performance test while taking up less energy and being sold at a lower cost. Further, the company was selected by the US Department of Agriculture alongside supercomputer company Cray to build what will be the world’s most powerful supercomputer.
However, while Deutsche Bank’s Ross Seymore increased his price target on shares of AMD from $20 to $25, he remains unconvinced with a Hold rating.
As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ross Seymore has a yearly average return of 26.4% and an 82% success rate. Seymore is ranked #22 out of 5,223 analysts.
While AMD is expected to release its brand-new 7nm CPU and GPUs, marking what is expected to be a serious boost to its product line, the 3950x isn’t expected to be sold until September. Seymore says the delay allows Intel to “continue to enjoy success at the high-end for some time.” Intel, for its part, is expected to release its 10nm CPU next year, but the company continues to face development challenges, giving way for AMD to improve its market share.
On gaming, Seymore sees a continued threat from Nvidia, which generates about half of all revenue from this segment. The analyst says, “depending on the details regarding Nvidia Super, we could see a path to such growth, but it will likely be at the expense of AMD’s market share in addition to further normalization in demand trends.” But while Nvidia is expected to see only a slight growth in revenue, Seymore “forecast[s] +35% q/q growth in GPUs in 3Q and another +30% growth in 4Q” for AMD.
All in all, the biggest takeaway for many on Wall Street is AMD’s increasing threat to rival Intel, which it is doing by improving and adding new products to its lineup. TipRanks analysis of 21 analyst ratings shows a consensus Moderate Buy rating with 13 analysts saying Buy and 8 suggesting Hold. Yet, the consensus price target shows caution baked into expectations here. The 12-month average price target of $32.22 reflects only 3% upside from current levels. (See AMD’s price targets and analyst ratings on TipRanks)\