Three years ago, Intel’s PC CPUs seemed untouchable. With Advanced Micro Devices’ (AMD) 3rd generation Ryzen launch on July 7th, the gap between the two companies’ CPUs in performance is slimmer than ever.
The new generation of Ryzen desktop CPUs from AMD comes in five levels, starting at a price of $199 for the most basic 6-core CPU and topping out at $499 for the 12-core CPU. All five of these desktop CPUs are featuring 7nm technology. In addition to the CPUs, AMD released two new Ryzen 3000 desktop processors that include integrated graphics, chips that are called Accelerate Processing Units (APUs).
Nomura analyst David Wong believes in AMD and is impressed with its new lineup of chips. As a result, Wong maintained his Buy rating on AMD stock, while raising his price target from $33 to $37. (To watch Wong’s track record, click here)
We like to give credit where it’s due and David Wong’s track record on his calls is impressive. Wong has a 71% success rate overall with a 17.6% average return. On AMD specifically, Wong’s calls have a 76% success rate with an average return per rating of 43.6%.
Wong believes that AMD’s new CPUs and APUs will help the company continue to raise its market share in the desktop processor market. Right now, unit market share is ~17%, and Wong thinks that by December 2019 AMD will reach 20% market share. The average selling price per desktop processor has been at close to $90 this year, which Wong expects AMD to maintain through the rest of 2019. Only two years ago, AMD was selling its desktop processors for an average price of $50 per chip.
AMD is clearly executing on its growth strategy, and Wong’s confidence has grown “in the company’s ability to continue driving market share gains and revenue growth.” AMD’s profitability is also improving, and Wong thinks that his 2021 EPS estimate of $1.12 is “a fair amount below the earnings power AMD should be able to demonstrate in time.” Wong forecasts earnings growth in 2020 to be at 25%, with gross margins improving to 12% in 2020 from 8% this year.
All in all, Wong is confident in AMD, and his conviction grew with this new product lineup launch. Wall Street also has a positive outlook on AMD’s stock, with TipRanks showing a Moderate Buy consensus. Analysis of 21 analyst ratings over the last three months shows that there are 13 Buy ratings on AMD, and 8 Hold ratings. (See AMD’s price targets and analyst ratings on TipRanks)