Market Overview

Bank Of America Thinks AMD Is 'Too Attractive To Ignore'

Share:
Bank Of America Thinks AMD Is 'Too Attractive To Ignore'

Advanced Micro Devices, Inc. (NASDAQ: AMD) stock has tanked more than 21 percent in the past month after the company said it expects a 15-percent sequential drop in revenue in the fourth quarter. But while AMD’s weak guidance sent some investors running for the hills, at least one Wall Street analysts says it’s time to buy the dip.

The Analyst

Bank of America analyst Vivek Arya maintains a Buy rating and $18 price target for AMD stock.

The Thesis

After meeting with company management, Arya is convinced that AMD’s positioning in the server processor market gives the stock a major source of upside in coming quarters.

According to Arya, AMD’s EPYC is on track to begin deployment in Q4 and ramp in 2017. AMD could soon pose a serious threat to Intel Corporation (NASDAQ: INTC)’s dominant share of the $15 to $20 billion server processor market. Management reiterated the company’s previous near-term goal of reaching 10 percent market share of this massive market, a share that could represent up to $2 billion in sales annually.

AMD wants to eventually return to its prior peak CPU market share of 27 percent. The previous peak came way back in 2006 when AMD’s Operon chips made a huge impact on the market. Last time AMD took a bite out of Intel’s market share, Intel responded by dropping its average sales price by 25 percent. However, Arya said there are several key differences this time around.

Arya said Intel’s Data Center Group “is more significant to INTC in terms of profitability than it was 10 years ago, and hence INTC would be careful cutting price aggressively.” In addition, Arya said AMD “is not principally competing on price – instead competing on performance.”

Price Action

AMD stock was up 0.6 percent on Tuesday morning, while Intel stock was down 0.5 percent.

Related Links:

AMD Has More To Lose Than Nvidia Should Bitcoin Mining Hardware Sales Decline

What Wall Street Thinks Of Nvidia's Huge Quarter

Image Credit: Rico Shen, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for AMD

DateFirmActionFromTo
Nov 2019DowngradesOutperformMarket Perform
Nov 2019MaintainsOutperform
Nov 2019MaintainsNeutral

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Bank of America Vivek AryaAnalyst Color Top Stories Analyst Ratings Tech Best of Benzinga

 

Related Articles (INTC + AMD)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

EUR/GBP Analysis: Bears Are Losing Grip, Need Progress Soon

Some Dividend ETFs Could Give GE The Boot