Canaccord Sees Advanced Micro Devices' Upside Ahead Of New Gaming Console Cycle

Canaccord Genuity’s Matthew D. Ramsay believes the risk/reward for Advanced Micro Devices, Inc. AMD remains skewed to the upside, despite the recent move in the stock.

Ramsay upgraded the rating on the company from Hold to Buy, while raising the price target from $3.25 to $6.00.

Improved Product Portfolio

“With an improved GPU and x86 CPU roadmap now on leading FinFET process nodes, recent business divestitures and IP licensing deal infusing cash to lessen balance sheet risks,” the analyst mentioned.

Canaccord Genuity’s reviews of the Zen x86 microarchitecture with 40 percent IPC improvement and 14nm process benefits have been positive.

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The analyst believes that this product positions Advanced Micro Devices once more as a “viable second source” in the PC and notebook markets, as well as for re-entry into the server market in the longer term.

Gaming Console

“With the emergence of the gaming console business, we believe AMD lost focus on gaming GPU developers and tools – a focus now renewed,” Ramsay stated.

With the aggressive pricing on the Polaris GPU, Ramsay expects market share recovery from the low 20 percent to 30 percent.

Although historically, gaming console refreshes have occurred every six years, the analyst believes that “the emergence of VR and 4K content hastens this pace to ~3–4 years and will serve as a benefit to semi-custom volumes for AMD.”