Market Overview

Much Required To Be Done To Expand AMD’s Gross Margin


Analysts at Auriga maintain their "sell" rating on Advanced Micro Devices (NYSE: AMD). The target price for AMD is set to $6.

According to Auriga, “AMD is set to deconsolidate GlobalFoundries (GF) starting this quarter – a big step, but our work suggests that investors are overly optimistic on the beneficial effects – unless GF is willing to bleed money to ensure that AMD gets high gross margin, it’s tough to see how the product company can approach $1 EPS near-term as many bulls argue.”

Auriga believes that extrapolating Advanced Micro Devices’ performance from the strength in PC trends and solid results by Intel (NASDAQ: INTC) may risk “misinterpreting AMD’s competitive positioning.” “AMD has gained share in graphics from NVidia (NVDA, Hold) – good for sales but below corporate average gross margin – but its CPU roadmap looks weak, particularly in high-ASP/high-margin servers where checks suggest that INTC’s Nehalem product continues to gain market share,” the analysts say.

More Analyst Ratings here.


Related Articles (AMD + GF)

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