Shares of Advanced Micro Devices Inc. rose to new records on Wednesday after the chip company’s strong position and second-quarter forecast signaled a radical change in the semiconductor market following delays announced by Intel Corp. of Next generation chips last week.
AMD AMD,
The shares rose to a record $ 77.19 on Wednesday, and rose 13% to $ 76.27, after a record opening of $ 75.50.
For the year, AMD shares were up 66%, compared to a 13% gain for the PHLX SOX Semiconductor Index,
a 17% gain for the Nasdaq Composite Heavy Technology COMP Index,
and a 0.4% increase in the S&P 500 SPX index,
On Tuesday night, AMD beat Wall Street estimates in its quarterly results and outlook, boosting a year-long outlook that had been deemed optimistic even before the COVID-19 pandemic hit.
Analysts, on average, raised their revenue estimates for AMD to $ 2.49 billion from $ 2.31 billion for the third quarter after AMD forecast sales from $ 2.45 billion to $ 2.65 billion. For the year, Wall Street records revenue of $ 8.72 billion, above a previous estimate of $ 8.4 billion, after AMD forecast annual sales of approximately $ 8.88 billion.
Susquehanna financial analyst Christopher Rolland upgraded AMD to a positive neutral rating because the company was “capitalizing on Intel’s 7nm faceplate.” Rolland also raised its target price to $ 85 from $ 64.
Rolland was referring to last week’s surprise announcement that Intel Corp. INTC,
delayed the launch of its 7-nanometer chips until at least the end of 2022 due to manufacturing problems. Intel shares shed around 2% on Wednesday and are down 19% on the year.
In chip language, nanometers, or nm, refers to the size of the transistors that go on a computer chip, with the general rule that smaller transistors are faster and more energy efficient. AMD, on the other hand, already sells 7nm chips, and has spent 2020 releasing more and more versions of them.
Rolland believes AMD will capture 20% of the server share by 2023, following a company announcement that it has reached its “double-digit” market share target in the server market. By 2023, Rolland also sees AMD capturing 35% of the laptop market, compared to 20% today; 40% of desktop computers, up from 20%, and 10% of GPUs in data centers, up from 3% today.
Read:AMD is set for second half blockbuster, but is not guaranteed
Of the 36 analysts who cover AMD, 14 have overweight or buy ratings, 19 have hold ratings and three have sell ratings. Of those, 20 raised their stock price targets, resulting in an average price target of $ 70.68, compared to an average of $ 55.48, according to FactSet data.
Bernstein analyst Stacy Rasgon, who has a market rating at AMD and raised her price target to $ 70 from $ 45, said that while some critics might complain that AMD’s operating expenses are limiting earnings per share, Now is the time for the company to invest in its operations “since it is critical for them to consolidate their position in the wake of Intel’s struggles.”
“And to that end, the emerging reversal of fortunes between the two companies is entering the realm of mind-blowing as AMD for a turnaround appears to be on the rise, while its biggest competitor falters,” Rasgon said.
Jefferies analyst Mark Lipacis, who has a buy rating and raised his target price to $ 86 from $ 63, called the second quarter a “watershed” event for AMD as he expects AMD earnings at Intel to accelerate .
Cowen analyst Matthew Ramsay, who has a top performance rating and raised his price target to $ 90 from $ 65, said AMD’s “good results and (more importantly) consistency of product execution contrasted with stumbling blocks on the Intel roadmap. “
“Despite significant progress to date, we believe AMD’s stock earnings are just beginning to unfold in the marketplace with 7nm products for servers, desktops and GPUs, all released in the last few quarters and 7-inch laptops even more recently, “Ramsay said.
Oppenheimer analyst Rick Schafer, in a note titled “Let the Games Begin!”, Said that while AMD was a “compelling growth” story, it was going to wait on the sidelines due to high stock valuation. Schafer has a performance rating on AMD.
Schafer cautioned that while he believes AMD may continue to increase its share of the server market, “Additional earnings may be limited given the tight availability of 7nm” at Taiwan Semiconductor Manufacturing Co. TSM,
which makes AMD chips. Revenue from TSMC’s US depositaries increased 5% in recent operations.
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