Stock Analysis & Ideas

AMD: Time to Release the Bulls, Says Analyst

Last week, Advanced Micro Devices (AMD) officially launched its 4th generation EPYC Genoa server processors and the early feedback from the market seems highly promising.  

Baird analyst Tristan Gerra has been keeping an eye on the initial reaction. “Supply chain checks highlight strong reception of Genoa (5nm Zen 4) at data center OEMs, which are shifting significant resources in support of AMD helped by the VMWare migration platform partnership,” the 5-star analyst buoyantly said.

According to Gerra, Genoa’s very notable performance improvement should result in an “acceleration” of AMD’s market share gains next year, as well as meaningfully higher pricing and a “higher gross margin profile.” This should further consolidate AMD’s EPYC performance domination in the years ahead before Intel can close the gap, even if its Intel 3 plans are executed on time.

“Importantly,” the analyst went on to add, “AMD is solidifying its position with a clearly-defined, performance-leading and delivery-proven product roadmap to OEMs for the next several years, representing a critical key ingredient for market share gains, against Intel’s two-year delay on a performance-lagging architecture which could make Sapphire Rapids a stale product even as it ramps in 2023.”

There’s also an additional upcoming launch which could see AMD take market share from another rival. The company will launch its RDNA 3 (RX 7900 XTX, RX 7900 XT) chiplet-based GPUs on December 13, and the cost savings and “competitive price points” enabled by the chiplet architecture against Nvidia’s RTX40 series could see AMD gain share. This is particularly relevant when considering the current “price sensitive customer demand environment.”

Elsewhere, Gerra’s supply chain checks indicate that with ongoing supply constraints and “strong, above -seasonal demand with visibility extending through 1H23,” Xilinx products’ are also generating plenty of interest.

The slew of positive developments is enough for Gerra to change tack on all things AMD. The analyst upgrades his rating from Neutral to Outperform (i.e., Buy), while boosting the price target on AMD to $100 (from $65). As such, Gerra now sees the shares delivering returns of 31% in the year ahead. (To watch Gerra’s track record, click here)

Most analysts agree although not all are ready to turn quite as bullish; AMD claims a Moderate Buy consensus rating, based on 20 Buys vs. 7 Holds. At $83.14, on average, the analysts predict a 12-month upside of ~9%. (See AMD stock forecast on TipRanks)

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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.

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