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Advanced Micro Devices, Inc. (NASDAQ: AMD) Stocks fell on Wednesday despite the company’s strong quarterly report.
AMD analysts: Rosenblatt Securities analyst Hans Mosesmann reiterated a buy note on AMD and raised the price target from $ 120 to $ 135.
Wells Fargo Securities analyst Aaron Rakers maintained an overweight rating and a price target of $ 120.
KeyBanc Capital Markets analyst Weston Twigg maintained a sector weighting rating.
Rosenblatt says AMD could double in size: AMD had better-than-expected fourth-quarter sales, driven by widespread demand for customer Ryzen processors, server EPYCC processors, client / data center GPUs, and game consoles, Mosesmann said in a note.
The outperformance of the bottom line is due to the better result, the analyst said.
The gross margin of 44.8% is slightly lower than Rosenblatt’s estimate, he said.
A better-than-season PC and console market and the continued strength of the EPYC data center, Mosesmann said, drove the first quarter outlook.
“The new EPYC3 Milan server, which has helped improve the strength of Cloud / Enterprise up to 4Q20 and 1Q21, gives AMD the best visibility for years with increased momentum in larger cloud clients, workloads and businesses. ”
Among the main takeaways from this call by the analyst: AMD not seeing inventory digestion in the cloud, which was reported by Intel Corporation (NASDAQ: INTC) for the first half of 2021.
Management also said that EPYC server activity has grown as 4Q20 progressed, he added.
These factors suggest that Intel’s Ice Lake is not capturing the design gains it was hoping for as this product’s specs become more widely known to offset Milan’s momentum, Mosesmann said.
Given the secular opportunity and now $ 110 billion TAM, which includes the Xilinx, Inc. (NASDAQ: XLNX), the prospect of AMD’s doubling in size over the next few years is highly achievable, according to Rosenblatt.
View more revenue on AMD
Related Link: AMD Analyst Projects Strong Start Until 2021 For Chipmaker
Wells Fargo positive thesis on intact AMD: Well’s Fargo’s positive thesis remains intact after AMD’s strong quarterly results and above-consensus forecasts for the first quarter and full year 2021, Rakers said.
Revenue from EPYC CPU server processors could have been $ 535 million, up 65%, the analyst said.
The company said it saw a doubling of the number of EPYC-based cloud instances in 2020 and also expressed confidence in further expansion with a full launch of Zen 3 Milan EPYC 7nm processors in March, a- he declared.
According to Wells Fargo, AMD stocks are expected to trade in response to expectations of continued strong demand for PCs and acceleration in server processor dynamics.
The expansion of the GPU Instinct traction of AMD’s data center is likely to be a progressive growth / sentiment engine, Rakers said.
High valuation competition keeps KeyBanc out: AMD’s share winning story is intact, with strong momentum in the data center and a better opportunity to expand its GPU share, Twigg said in a note.
To reflect the strong forward guidance, the analyst raised estimates for AMD.
Growth is expected to slow in 2022, as demand growth is likely to slow as the favorable winds from the pandemic wear off and share gains are likely to slow, he said.
“Expectations for AMD remain very high, and with compelling new products and an ambitious new CEO at rival Intel, the bullish discourse on AMD may start to weaken, limiting the upside to its aggressive multiple (~ 45x our estimate of BPA 2022), in our opinion, ”Twigg said.
“Although execution and demand are strong, we are retaining our sector weight due to high valuation and an increasingly competitive landscape.”
AMD price action: At last check, AMD shares were down 3.98% to $ 90.94
Related Link: AMD Should Take Its Strength From Intel’s Weaknesses, Game Console Chips
Latest ratings for AMD
|
Dated |
Strengthen |
action |
Of |
AT |
|---|---|---|---|---|
|
Jan 2021 |
Mizuho |
Maintains |
Buy |
|
|
Jan 2021 |
Capital Loop |
Maintains |
Buy |
|
|
Jan 2021 |
JP Morgan |
Maintains |
Neutral |
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