With its stock up more than 70% this year, Advanced Micro Devices (AMD) stock must be doing something right.
The chip giant was recently selected by the US Government to be part of the development of the world’s most powerful supercomputer. In addition, the company announced it would reenter the mobile market with a licensing agreement with Samsung. Finally, many are anxiously waiting for the much-anticipated release of its 7nm chip, which should be a boon to demand as Intel stalls.
That seems to be enough for shaking Morgan Stanley’s bearish call. Joseph Moore has shift his rating from Underweight to Equal-weight, while also raising his price target to $28. (To watch Moore’s track record, click here)
Moore calls his previous bearish view “wrong,” though believes he was still correct on some aspects. Though not bullish, he sees opportunity heading into the second-half for AMD.
Going into the second-half of the year, Moore sees Intel’s “deferred” comeback and Nvidia’s long-term investment in ray tracing as a positive for AMD. He believes the company could see “a period of sustained profits.” While the analyst says “tier one OEMs…will have limited adoption of AMD desktop and server products,” he believes this “indicates that usage will grow next year,” which is different than his expectations earlier this year.
Among the catalysts to drive the stock, Moore believes the AMD-Microsoft cloud gaming partnership should be important, which the analyst expects to be announced at E3 next week. This comes three months after the company announced a partnership with Google to power its cloud gaming platform, which sent the stock up about 14% in the days after. Moore believes the company could “be in a very strong position to benefit if these cloud based gaming platforms start to take off.”
Though the company’s big news this year is around processors and its 7nm chip, Moore remains “convinced that it will take time to generate market share,” but could be accelerated by Intel’s continued trouble. Moore says, “with Intel unlikely to introduce 10nm desktop product next year, AMD should be able to maintain a positive trajectory in that space.”
AMD continues to show investors, analysts and the tech world that it is an innovative and trustworthy company. TipRanks analysis of 21 analyst ratings show echoes the positive sentiment, with a consensus Moderate Buy rating on 13 Buys and eight analysts Holding. The $32.19 price target represents a 1% downside from its current value. (See AMD’s price targets and analyst ratings on TipRanks)