AMD Momentum Continues Amid Share Gains, Product Superiority And Execution

Advanced Micro Devices, Inc. AMD reported another strong beat-and-raise quarter and its stock is trading higher.

The AMD Analysts: Rosenblatt Securities Hans Mosesmann maintained a Buy rating on AMD and increased the price target from $150 to $180. The analyst continues to view AMD as a top-three Buy pick.

KeyBanc Capital Markets analyst John Vinh has a Sector Weight rating.

Raymond James analyst Chris Caso reiterated an Overweight rating and increased the price target from $110 to $140.

AMD Will See Years of Outperformance, Rosenblatt Says: AMD's third-quarter revenues of $4.31 billion exceeded the consensus of $4.1 billion on strong across-the-board demand in client Ryzen CPUs, server EPYC CPUs, client/data center GPUs, Mosesmann said.

Helped by the topline outperformance, better-than-expected non-GAAP gross margins and a lower tax rate, the company's non-GAAP earnings per share came in at 73 cents, exceeding the 67-cent consensus estimate.

The momentum continues for AMD in all strategic CPU, GPU, and semi-custom portfolios, the analyst noted.

Rival Intel Corporation's INTC suggestion of its challenges persisting for the next several years implies AMD will continue to enjoy significant, disruptive, and sustainable impact in the x86 market, Mosesmann said.

The analyst sees years of significant sales growth, margin expansion, and with Xilinx, Inc. XLNX, a meaningful diversifier into key infrastructure markets including data center (networking/storage), communications, automotive and industrial.

Related Link: Why AMD Is Looking 'Solid' Into The Year-End

KeyBanc Stays On The Sidelines Due to Valuation: Semi-custom console gaming drove most of the upside, with data center CPU and GPU also contributing, Vinh said. Supply constraints and kitting issues appear to limit PC growth as AMD redirects capacity toward higher gross margin data center products.

AMD raised its full-year revenue growth outlook to +65% versus a previous +60%, driven by incremental capacity coming online, the analyst noted.

Management expects the PC market to be flattish in the fourth quarter as continued matched set constraints limit the fulfillment of strong user demand.

While expecting flat industry PC growth in 2022, AMD said it will likely grow and gain share, the analyst noted. The Xilinx acquisition will likely close by the end of the calendar year.

The analyst remains on the sidelines due to valuation.

RayJay Does an AMD Vs Intel Comparison: AMD's report once again demonstrated a marked contrast with Intel's report, demonstrating strong share gains, Caso said. AMD likely has gained six points of server share since earlier this year, and it's not experiencing the China weakness Intel mentioned on their call, he added.

AMD also carries more modest assumptions about the PC client market as compared to Intel, and it's taking share in that segment as well.

"Our call on AMD is that they simply need to gain access to supply in order to continue gaining share, since their products are simply superior, and that will continue for many years as Intel addresses their manufacturing issues — and Intel's success is far from assured," the analyst said.

AMD Price Action: AMD shares were advancing 1.12% to $124.31 at press time.

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationTop StoriesAnalyst RatingsTechTrading IdeasChris CasoHans MosesmannJohn VinhKeyBanc Capital MarketsRaymond JamesRosenblatt Securities
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