There’s a New AMD Bull in Town
In a very upbeat and promising report, analyst Matthew Bryson of Wedbush explains why he’s initiated coverage on Advanced Micro Devices (AMD) stock with a Buy rating and a $35 price target.
While Intel still dominates the PC and data center CPU markets, AMD has been successfully chipping away at its lead. A new generation of AMD Ryzen processors announced in May has the potential to extend those gains even further. Indeed, Bryson believes “the shift to 7nm production for [AMD’s] 3 rd generation parts appears likely to close any gap with INTC PC CPUs and indeed AMD at CES demonstrated superior metrics for its unfinished parts vs. INTC’s current top of the line processors.”
The most important factor, when it comes to PC and server markets, is the the advantages AMD has with its chiplet architecture and its seven-nanometer sort of process capabilities, which have a great sort of power performance benefit. Bryson believes “AMD’s early adoption of a distributed “chiplet” architecture combined with a shift to leading edge geometries positions the company to take meaningful share from INTC” over the upcoming few years.
AMD may have lost ground in the desktop GPU market, but there is buzz building about its newly announced 7nm Radeon graphics cards. Also on the gaming front, Bryson sees “AMD’s initial win with Google to supply its Stadia streaming service with GPUs as both a future opportunity and insurance against potential cannibalization of gaming hardware.”
Last but not least, Bryson cheers AMD’s recent contract to produce what will become the fastest supercomputer in the world. In conjunction with Cray, it will develop the Frontier supercomputer for the U.S. Department of Energy (DOE) for Tennessee’s Oak Ridge National Laboratory. Bryson believes the deal “validates AMD’s intermediate-term roadmap for its CPU and GPU architectures.”
All in all, Bryson views “AMD’s reemergence in CPUs (and to a lesser extent GPUs) as one of the likely major shifts in both the PC and data center markets over the next few year.”
The initial word out on the Street echoes Bryson’s bullish conviction on the chip maker, as TipRanks analytics showcase AMD as a Buy. Based on 21 analysts polled in the last 3 months, 13 recommend Buy, while 8 suggest Hold. The 12-month average price target stands at $32.22, marking a 6% upside from where the stock is currently trading. (See AMD’s price targets and analyst ratings on TipRanks)