Advanced Micro Devices (NASDAQ: AMD) saw its shares skyrocket during the peak of the day after an analyst issued a "buy" rating on the stock, pointing to a bright future for 7nm products. the society.
David Wong is an analyst at Instinet and today launched a hedge on AMD with a price target of $ 33 per share, which represents an additional 15% advantage over today's closing price of $ 29.02. 'hui.
Once the Instinet hedge has spread, investors rushed to buy stocks, generating a trading volume of 113 million shares for the day, well above the volume average of the last ten days, which was 68 million. Prices climbed more than 12% at lunch time before slackening slightly to reach around 8% during the daytime hours of the afternoon.
AMD about to develop in all major areas
Wong expects growth in some key areas of AMD, mainly around the company's future 7-nm product stack. For example, the analyst estimates that EPYC's market share is expected to more than double from 3% to 4% to 10% in the near future. Through the third generation of Ryzen processors, he found that the number of laptops and x86 desktops would increase by almost half over the next year. Finally, while AMD has been hit hard in graphics processor shipments, the analyst sees great promise for the new generation of products due later this year. GPU's market share could rise from less than 20% currently to more than 30% once Navi has saturated its distribution channels.
The profitability of AMD will depend on the difficulty of the company for many years.
"We expect GAAP GAAP GAAP earnings to increase until 2019 and will significantly increase in subsequent years compared to the break-even point reached in March 2019," he wrote. "We believe that at some point in the next few years, AMD will be able to demonstrate EPS power of $ 2.00 or more."
AMD closed the year 2018 with EPS of $ 0.68 per share; $ 2.00 per share would see the company triple its earnings.
The shares were even stronger after Digitimes announced that several major PC makers had discussed the general strength of processor and GPU shipments to close the second half of 2019. DigiTimes also reported that TSMC had seen a huge ramp for orders of 7 nm wafers and of course, we can assume that many of them are AMD products. If the global market for personal computers and laptops is strong and TSMC has a satisfactory volume for 7nm, we can assume that AMD is well positioned here to ensure optimal growth.
The Californian semiconductor company in Santa Clara, California, has been growing steadily since its historic low in early 2016. Intel (NASDAQ: INTC) suffers from delays in its 10-nm process, and TSMC is ahead of its time 7 nm process, used by AMD for the manufacture of its future third generation Ryzen products.
Investors seem to agree that it is time for AMD to take advantage of this opportunity. The thing to watch for here will be AMD's earnings, as the company is already trading at an inflated price / earnings ratio, which means that at its current price, investors have already accounted for a significant portion of the future growth of the company. AMD. Of course, we will have more to report after AMD publishes its results for the first quarter of 2019 later this month.