The last five years have been one unstoppable ride to the summit for chipmaker Advanced Micro Devices (AMD). Simultaneously closing the gap between its traditionally bigger rivals, Intel and Nvidia, and itself, the CPU/GPU maker is now most definitely a force to be reckoned with.
Following an investor call with the company, Nomura analyst David Wong sees no reason to change tack when considering AMD as an investment.
The 5-star analyst has a Buy rating on AMD shares to go along with a $64 price target. The implication for investors? Potential upside of 18% from current levels. (To watch Wong’s track record, click here)
Behind AMD’s growth has been an exemplary roadmap. Still to come in 2020 is the launch of the highly anticipated Milan data center CPU, the third generation EPYC processor. Add to that the release of a new data center GPU “optimized on CDMA data center optimized architecture,” a new consumer GPU (Big Navi on RDNA 2), and Zen 3 desktop CPUs.
AMD has stated its “product cadence” has been “condensed” so that new generations could hit the market every five or six quarters. Desktops and servers are usually first in line, followed by notebooks.
“Given that AMD intends to launch a new generation of desktop and server CPUs near the end of 2020 and recently launched a new generation of notebook processors, this cadence implies that there may be a new generation of notebook processors in 2021 and a new generation of desktop and server processors in late 2021, or more likely the first part of 2022,” Wong said.
The company’s aim of achieving between 20% to 30% year-over-year revenue growth in 2020 appears to be on track, too. In addition, despite the fact that this quarter’s ramp up of new semi-custom products for next-generation game consoles has had a “temporary impact” on gross margins, the chipmaker’s long-term goal of bringing in gross margins of over 50% hasn’t changed, either.
Now let’s take a look at what the rest of the Street currently makes of AMD; Based on 12 Buys and 8 Holds, AMD has a Moderate Buy consensus rating. The analysts forecast a modest upside of 2%, should the $56.56 average price target be met over the next 12 months. (See AMD stock analysis on TipRanks)
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