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Goldman's Semiconductor Pair Trade: Buy AMD, Sell Intel

Goldman's Semiconductor Pair Trade: Buy AMD, Sell Intel

Advanced Micro Devices, Inc. (NASDAQ: AMD) offers a compelling buying opportunity even as rival Intel Corporation (NASDAQ: INTC) remains a Sell, a Goldman Sachs analyst said Wednesday. 

The AMD, Intel Analyst: Analyst Toshiya Hari upgraded AMD from Neutral to Bu, and added the shares to Goldman's Conviction List. The analyst raised the AMD price target from $84 to $96. 

Hari reiterated a Sell rating on Intel shares and reduced the price target from $38 to $46.

Goldman Projects Above-Consensus AMD Earnings Growth: The recent correction that resulted in AMD shares declining about 17% from their September highs presents a compelling opportunity to participate in what could be a multiyear share gain and margin expansion story, Hari said in a note. 

The weakness may have to do with concerns around the sustainability of demand and AMD's proposed acquisition of Xilinx, Inc. (NASDAQ: XLNX), the analyst said. 

Related Link: Intel Makes Its Second AI Acquisition In A Week

AMD is poised to experience share gains across the PC and CPU markets — and margin expansion, he said.

These factors, along with operating leverage, will likely drive above-consensus earnings growth, Hari said.

Goldman Bearish On Intel: The ongoing concerns surrounding Intel's competitive position in CPUs, which fetch the company around 70% of total revenue, and its margin profile have left Goldman bearish on the company, the analyst said. 

AMD, Intel Price Action: AMD shares were trading 4.97% higher at $80.38 at last check Wednesday, while Intel shares were up 1.65% at $45.59.

Related Link: Why The Best Outcome For Intel Shareholders Is To Break Up The Chipmaker

Photo courtesy of AMD.

Latest Ratings for AMD

Jan 2021MizuhoMaintainsBuy
Jan 2021Loop CapitalMaintainsBuy
Jan 2021JP MorganMaintainsNeutral

View More Analyst Ratings for AMD
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