AMD stock is tearful. Why a reviewer says he was wrong.

[ad_1]

Text size

AMD will likely ramp up production of its powerful graphics and data center processing chips even further, an analyst wrote. Courtesy of AMD

A glance at the stock chart shows that Advanced Micro Devices had a less than inspired start to the year. Shares were almost flat in the second quarter, leaving investors with little reason to be excited about the expensive buy.

But the stock has flipped in the past two weeks, since the company posted strong earnings on July 27. Shares of Advanced Micro Devices (ticker: AMD) jumped 22%, setting new highs along the way.

On Monday afternoon, the stock lost 0.7% to $ 109.30. The S&P 500 was also down, 0.1%, although the Nasdaq Composite was up 0.2%.

BMO Capital Markets analyst Ambrish Srivastava jumped on the bandwagon over the weekend. In a note, Srivastava improved its rating on Market Perform from Underperform and raised its target price to $ 110 from $ 80. The new estimates are based on a multiple of 31 times 2023 earnings.

Srivastava offered an apology of sorts: We clearly got it wrong in our call for underperformance on AMD stocks. He wrote that while he tends to be patient, he had to admit that earnings estimates for next year had jumped and could no longer justify his underperformance rating.

The analyst had maintained the equivalent of a Hold rating for about three years until he was demoted to Underperform in mid-January. Its bearish turn was justified, Srivastava said, because the company’s rich valuation was in part the result of the missteps of rival Intel (INTC) in recent years, and because AMD’s share gains versus Intel would slow down in 2022.

Srivastava noted that AMD’s profits and revenue projections could rise further. The chipmaker will likely ramp up production of its powerful graphics and data center processing chips even further. The wins are not reflected in current estimates, Srivastava said.

Even though AMD’s share gains will slow down as next-gen Intel chips are rolled out, AMD has now performed and delivered to such an extent that it has carved out a position for itself as a viable alternative to Intel in the future. predictable, he wrote.

Among analysts who cover AMD stocks, almost 60% rate buy stocks and about 40% have a hold rating. There is only one sale and the average target price is $ 112.76.

Write to Max A. Cherney at [email protected]

[ad_2]