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Advanced Micro Devices, Inc. (NASDAQ:AMD) shares have soared about 44 percent year-to-date, after a nearly 80-percent rally in 2018.
Notwithstanding the recent run, one RBC Capital Markets analyst still sees an opportunity to build positions in the stock.
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The Analyst
Analyst Mitch Steves maintained an Outperform rating on AMD with a $34 price target.
The Thesis
AMD is likely to see gains in notebook market share as early as the second quarter and desktop market share in the third quarter, Steves said in a Wednesday note.
Relative to the more volatile data center and smartphone markets — which take up a larger amount of memory spending — the PC market is still meaningful, particularly for AMD, the analyst said.
RBC is projecting a small increase in PC units in 2019.
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"This would likely create a small multiplier effect as share gains are on higher-than-expected units," Steves said.
AMD could see higher ASPs and gross margins, as the share gains are at the higher end of the market, he said. This would lead to modestly higher EPS, particularly in the second half, the analyst said.
AMD is likely to continue to show high volatility going forward given the debate around server share gains, PC share gains and ASPs, according to RBC.
It could be profitable to buy the stock on "down days," which could represent dips of as much as 5 percent, Steves said.
RBC named AMD as a high beta name to own in 2019, while its core holding for the year is Synopsys, Inc. (NASDAQ:SNPS).
The Price Action
AMD shares were jumping 9.31 percent to $29.24 at the time of publication Wednesday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.