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The profits of Advanced Micro Devices Inc. are expected to benefit from an exceptional increase in PC sales and competitive gains against the Intel Corp. chip giant, but the massive gains recorded recently are subject to withdrawals due to the traditional volatility of AMD. earnings.
AMD
AMD, -1.26%
is expected to report quarterly results after the close of trading on Wednesday.
Recently, research firms Gartner Inc. and International Data Corp. reported that quarterly PC sales experienced their strongest growth from one year to the next in six years, and analysts believe that AMD is benefiting from it.
The chip giant Intel Corp.
INTC, -0.13%
which reports the day after AMD, but some analysts see AMD making significant gains against Intel's dominant position. For example, Northland Capital Markets analyst, Gus Richard, downgraded Intel in June after concluding that AMD was taking the lead in terms of the manufacturing process.
Look at how this advantage works in AMD's outlook, said Matthew Ramsay, a Cowen analyst, who outperforms and targets a $ 21 price. sales momentum, new 7nm Vega GPU launches and the overall 7nm CPU / GPU roadmap in 2019, "Ramsay said in a note." Center-forward for AMD are its 7nm advancements that will likely place it on the market. Process node parity with Intel 10nm for 2019, a dynamic not seen in more than a decade. "
" 7nm "and" 10nm "- where" nm "means nanometers – refers to the way in which a small chip maker can make the transistors that go on a computer chip, with the general rule being that the smaller transistors are faster and more efficient in the use of power. Analysts believe that the Cryptocurrency mines have become an increasingly accepted reality, but increased erosion in this sector, which accounts for about 10% of sales, could be a hindrance during AMD's action [19659009WecouldconsideranyeventualNegative(unforeseen)riskasanopportunitytopurchasesincetheverticalhasnoimpactonourlong-termthesisandwehavelargelyeliminatedanycontributionfromourmodelstartingin2019"saidCowen'sRamsay
Earnings: Of the 26 analysts surveyed by FactSet, AMD on average is expected to post an adjusted profit of 12 cents per share. Estimize, a software platform that uses crowdsourcing of hedge fund executives, brokerage firms, buy-side analysts and others, claims a profit of 14 cents per share.
Turnover: according to 25 analysts surveyed by FactSet. AMD is forecasting revenues of $ 1.68 billion to $ 1.78 billion. Estimate expects revenue of $ 1.76 billion.
Read: What will the chip makers say about the trade war?
Stock Market Movement: AMD action has rebounded nearly 70% since the last profit report of the chip maker, against a 6.2% rise in the S & S index P 500
SPX, -0.09%
and a gain of nearly 12% in the Nasdaq Composite Index
COMP, -0.07%
over the same period. These gains are subject to the traditional volatility of AMD from profit reports. Over the last 12 quarters, AMD stock prices have hovered six figures in the day following earnings, with management not always answering whether or not the results beat Street's estimates.
What Analysts Say: Of the 33 analysts who cover AMD, 13 have buy or overweight ratings, 14 have credit scores and six sales ratings or underweight, with a goal of $ 14.88. Analyst Stacy Rasgon, who has an online quote and a $ 13 goal on the stock, said the weak cryptocurrency sales "are no longer a surprise" could prove problematic as we think investors have underestimated Ross Seymore, an analyst at Deutsche Bank, with a conservation rating and a price target of $ 14, said that he expected that AMD provide a prediction over Street estimates on PC demand
. We expect AMD to deliver a solid report / guide, with consensus revenue estimates likely to revise upward revisions again, "said Seymore." While we remain impressed by the product performance AMD (Ryzen) PC, we see much of the current goodness of PC and the future growth potential of EPYC reflected in the recent recovery of AMD shares. "
Rottinghaus, with a neutral rating on AMD and a price target of $ 16.85, indicated that he saw increased optimism for AMD's server share prospects.
"The two main reasons behind optimism on AMD are the expected improvements on EPYC 2 / Rome and the lack of a new product of the INTC, said Rottinghaus.
"Given the many positive points of the". PC industry for the 2T18, We think that shipments for the PC PC processor range Zen-based AMDs are slightly better online than management boards, "said Kevin Cassidy, an analyst at Stifel. "The surprise may come from the fact that the Epyc server CPU is gaining ground ahead of consensus expectations for a 5% market share out of 4T18."
"AMD is expecting stronger than expected results., Games and high-end notebooks, all markets on which AMD has improved its competitive position through its Ryzen processors," said Cassidy. , which has a purchase rating and a US $ 21 price target on AMD.
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