Market Overview

Morgan Stanley Sticks To Bearish Stance On AMD, Points To Risks In Graphics Business

Morgan Stanley Sticks To Bearish Stance On AMD, Points To Risks In Graphics Business

Morgan Stanley is sticking to its bearish thesis for Advanced Micro Devices, Inc. (NASDAQ: AMD), and said Wednesday that any upside benefits for the semiconductor maker need to be taken in context with its overall business.

The Analyst

Morgan Stanley's Joseph Moore maintains an Underweight rating on AMD's stock with a price target lifted from $8 to $11.

The Thesis

AMD is likely to take full advantage of Intel Corporation (NASDAQ: INTC)'s manufacturing challenges, which implies the bull case for servers and client CPUs is "getting stronger," Moore said in a research report. 

Intel's 10nm delay gives AMD sufficient time to "build upon its initial credibility" and establish relationships with major enterprise customers, the analyst said. 

The trajectory of AMD's graphics business remains a "significant concern" after a 100-percent increase in discrete graphic sales in the first quarter to $650 million, Moore said. While this is "nothing short of exceptional," the analyst projects that AMD will post quarter-over-quarter declining sales figures for the rest of the year, as market share gains in gaming do not justify such growth, he said.

Cryptocurrency-related revenue accounted for 10 percent of the total in the recent quarter, but checks suggest the business "stagnated" in the second quarter, the analyst said. The competitive environment for mining products will intensify, and there is potential for "significant downside" moving forward, he said. 

While investors have valid reasons to be optimistic about AMD's server and client CPU businesses, the same expectations need to be balanced against potential risks in its larger graphics business, according to Morgan Stanley. 

Price Action

Shares of AMD were trading lower by 1.29 percent at the time of publication Wednesday. 

Related Links:

A Look Back At What's Happened To Each Sector Through The First Half Of 2018 (Part 1)

What The Latest Steam Gaming Data Means For AMD, Nvidia

Latest Ratings for AMD

Aug 2019Initiates Coverage OnNeutral
Aug 2019Initiates Coverage OnHold
Aug 2019Initiates Coverage OnHold

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: 10nm CPUAnalyst Color Cryptocurrency Price Target Reiteration Markets Analyst Ratings Best of Benzinga


Related Articles (INTC + AMD)

View Comments and Join the Discussion!

Latest Ratings

HUBBInitiates Coverage On160.0
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

Naked Brand Rips Higher After Closing Merger With Kiwi Lingerie Company

38 Stocks Moving In Wednesday's Mid-Day Session