tiprankstipranks
Advanced Micro Advancing Well
Stock Analysis & Ideas

Advanced Micro Advancing Well

The highly competitive semiconductor industry started 2021 impressively and at the forefront of the ongoing technological revolution.

One company performing exceedingly well and receiving consistent analyst attention is Advanced Micro (AMD), a chipmaker with an innovative product portfolio and attractive valuation. Recently, the company has been gaining traction in the data center market, with its competitive chips and new client wins.  (See AMD stock charts on TipRanks)

Vivek Arya of Bofa Securities is optimistic about the stock and believes that AMD’s valuation remains compelling at the current levels, in comparison to other Infotech peers. Arya maintained a Buy rating, and increased the price target to $120 from $110, suggesting a possible 12-month upside of 27.8%, stating that AMD’s price target is “well supported by the company’s ability to take share in large markets.”

AMD closed up 4.9% higher on Wednesday at a price of $93.93 per share. The chipmaker has gained 11.2% in the past five days and 78.6% over the past year.

The five-star analyst also explained that AMD’s data center segment is expected to witness strong growth, going forward.

Arya believes that AMD’s 3rd Gen AMD EPYC processors, which have been selected to power Google Cloud’s new T2D instances, are a big win for AMD. This T2D instance offers more than 40% higher price performance for scale-out workloads, an advantage that will help AMD strengthen its competitive position and accelerate share gains in the data center market.

Further, Arya sees the likely delay in Intel’s (INTC) release of its next-gen Sapphire Rapids Xeon-SP CPUs as positive for AMD’s competitive positioning. The outperformance of AMD Milan over Intel’s Ice Lake and Google’s addition to its client base have helped AMD to increase its share in the server market in Q1, the analyst said.

The analyst remains incrementally positive about AMD’s position in the server market in the near future, stating, “We see AMD server share headed toward its prior 25% peak, well-above consensus CY22 exit (Q4) expectation of 16%, driving annual EPS power toward $4 per share versus CY22 consensus at $2.65.”

Furthermore, Arya believes that AMD’s balance sheet has improved over the years, driven by its growth policies and improving competitive position in the market.

Referring to the debt profile of the company, Arya said that AMD has lowered its position by nearly $2 billion over the last five years, and is now in a net cash position. He stated that the recent announcement about AMD’s buyback of $4 billion shares “underscores strong balance sheet and management confidence in l-t stock upside.”

On TipRanks, AMD has an analyst rating consensus of Moderate Buy, based on 10 Buy ratings,  7 Hold ratings, and 1 Sell rating.  The average AMD price target is $107.50, reflecting a potential 12-month upside of 14.5%. 

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles