Market Overview

Morgan Stanley Sees Ethereum's Strength Benefiting AMD, Nvidia

Share:
Morgan Stanley Sees Ethereum's Strength Benefiting AMD, Nvidia
Related AMD
Tech Sector Earnings: Revenue Growth Widely Expected To Slow, Will Global Uncertainty Weigh?
Benzinga's Bulls & Bears Of The Week: Delta Air, McDonald's, Netflix, Nokia, Tesla And More
AMD Earnings: Time To Shine? (Seeking Alpha)
Related NVDA
Tech Sector Earnings: Revenue Growth Widely Expected To Slow, Will Global Uncertainty Weigh?
Benzinga's Bulls & Bears Of The Week: Delta Air, McDonald's, Netflix, Nokia, Tesla And More
Hagens Berman Notifies NVIDIA Corporation (NASDAQ: NVDA) Investors of February –9, —…–9 ... (GuruFocus)

Forget about bitcoin. For Advanced Micro Devices, Inc. (NASDAQ: AMD) and NVIDIA Corporation (NASDAQ: NVDA) investors, the cryptocurrency story is all about Ethereum.

The Analyst

Morgan Stanley analyst Joseph Moore reiterated an Underperform rating and $8 price target for AMD and an Equal-Weight rating and $222 target for Nvidia. Moore raised its Q4 EPS estimates for AMD and Nvidia to 9 cents and $1.25, respectively.

The Thesis

Ethereum’s price surge in recent months extend the mining opportunity for AMD and Nvidia, according to Moore.

Back in November, Moore said that, contrary to popular belief, bitcoin is irrelevant to graphics vendors because it moved to application-specific integrated circuit chips several years ago. Instead, most graphics-based mining is being driven by bitcoin rival Ethereum at this point.

At the time, Moore predicted Ethereum-related graphics sales would decline by 50 percent in 2018, but the cryptocurrency’s subsequent price surge from $293 to near $1,000 has changed the economics for miners.

“This has created a situation where the payback on new mining rigs has declined back to 57 days from ~6 months in October, which has created a substantial demand for Ethereum mining hardware and as a result AMD and NVDA GPUs,” Moore says.

Despite the fact the Q4 sales may be boosted by unexpected mining demand, Moore says the market will likely recognize that this phenomenon was only temporary.

For AMD, Moore says the recent Spectre and Meltdown security patches negatively impacted Intel Corporation (NASDAQ: INTC) CPUs more than AMD CPUs, but the issue likely won’t drive more business to AMD.

For Nvidia, cryptocurrency is just one of many growth drivers, including Volta, cloud, and Nintendo Co., Ltd (ADR) (OTC: NTDOY) Switch, that will allow Nvidia to continue its pattern of earnings beats and guidance raises.

Price Action

AMD and Nvidia are both off to a hot start to 2018. AMD is up 24.8 percent in January, and Nvidia is up 21.8 percent.

Related Links:

18 Stocks And ETFs To Watch In 2018

Bank Of America On AMD, Nvidia, And Intel's 'Processor-Gate'

Latest Ratings for AMD

DateFirmActionFromTo
Oct 2018BairdMaintainsNeutralNeutral
Oct 2018BMO CapitalMaintainsMarket PerformMarket Perform
Oct 2018BarclaysUpgradesUnderweightEqual-Weight

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Analyst Color Cryptocurrency Long Ideas Price Target Reiteration Top Stories Markets Analyst Ratings Best of Benzinga

 

Related Articles (INTC + AMD)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SHWKeyBancMaintains450.0
ACNCitigroupUpgrades169.0
CGBDJP MorganUpgrades15.5
NLYJP MorganUpgrades10.5
NTNXMorgan StanleyUpgrades58.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Mid-Morning Market Update: Markets Mixed; Johnson & Johnson Beats Q4 Views

8 Biggest Price Target Changes For Tuesday