Cowen Doubles Down On Bullish AMD Stance After Meeting With CTO

Cowen hosted Advanced Micro Devices, Inc. AMD Chief Technology Officer Mark Papermaster at its technology, media and telecom conference, and the executive "conveyed a positive tone" on AMD's 7nm product designs.

The Analyst

Cowen's Matthew Ramsay maintains an Outperform rating on AMD with an unchanged $18 price target.

The Thesis

Ramsay's takeaways after the conversation with the CTO included the following: 

• AMD has successfully completed three separate 7nm product designs, which are believed to be a Rome server, Vega graphics and third-generation Ryzen.
• AMD's 40-percent-plus gross margin target is a "milestone" and not an ultimate objective as the company ramps higher performance CPUs and GPUs.
• AMD has an opportunity to gain market share with server, notebook and desktop products.
• AMD is becoming "more competitive on more equal foundry footing."
• AMD could have a one-year head start to market against Intel Corporation INTC, as it could begin sampling 7nm data center CPUs in the bottom half of 2018 versus Intel's 2019 10nm PC timing.
• AMD's server sales should ramp in the bottom half of 2018 from the first-generation EPYC platform and the "impressive roster" of cloud and OEM engagements.
• Expectations for AMD to drive "meaningful" revenue growth as early as the bottom half of 2018 imply the company is likely to see material upside to its 75-cent-per-share EPS target by 2020.

Price Action

AMD shares were trading higher by 3.72 percent at the time of publication Friday. 

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