Advanced Micro Devices, Inc. (NASDAQ: AMD) Shares were retreating on Wednesday, despite the company’s strong quarterly report.
AMD analysts: Rosenblatt Securities analyst Hans Mosesmann reiterated an AMD buy rating and raised the target price from $ 120 to $ 135.
Aaron Rakers, an analyst at Wells Fargo Securities, maintained an overweight rating and target price of $ 120.
KeyBanc Capital Markets analyst Weston Twigg maintained an Industry Weight rating.
Rosenblatt says that AMD can double in size: AMD reported better-than-expected sales in the fourth quarter, thanks to widespread demand on customer Ryzen CPUs, EPYCC server CPUs, data center / client GPUs and game consoles, Mosesmann said in a note.
The bottom line’s superior performance was due to the better revenue line, said the analyst.
The 44.8% gross margin was slightly behind Rosenblatt’s estimate, he said.
A better-than-seasonal PC and console market and the continued strength of the EPYC data center, said Mosesmann, boosted prospects for the first quarter.
“The new EPYC3 Milan server, which helped drive the improvement of the Cloud / Enterprise strength in 4Q20 and 1Q21, is giving AMD the best visibility in years, with greater momentum in customers, workloads and broader Enterprise in the cloud .
Among the main conclusions of the analyst in the call: AMD did not see digest of cloud inventory, which was signaled by Intel Corporation’s (NASDAQ: INTC) for the first half of 2021.
Management also said that the EPYC server business has strengthened with the advance of 4Q20, he added.
These factors suggest that Intel’s Ice Lake is not capturing the design wins it had hoped, as the specifications for this product have become better known to offset Milan’s momentum, said Mosesmann.
Given TAM’s now $ 110 billion, secular opportunity, which includes the Xilinx, Inc. (NASDAQ: XLNX), the prospect of AMD doubling in size in the coming years is quite viable, according to Rosenblatt.
See more gains at AMD
Related link: AMD analyst projects strong start in 2021 for chip maker
Wells Fargo’s positive AMD thesis intact: Well’s Fargo’s positive thesis remains intact after AMD’s solid quarterly results and over-consensus guidance for the first quarter and the full year of 2021, said Rakers.
Revenue from the EPYC CPU server processor may have been $ 535 million, representing a 65% increase, the analyst said.
The company said it saw a two-fold increase in EPYC-based cloud instances in 2020 and also expressed confidence in further expansion with a full 7 nm Zen 3 Milan EPYC launch in March, he said.
Looking ahead, AMD’s shares are expected to trade in response to expectations of continued strength in PC demand and accelerating the boost in server CPU, according to Wells Fargo.
Expanding the traction of AMD’s data center Instinct GPUs is likely to be an incremental growth factor / sentiment, said Rakers.
The high-rating competition keeps KeyBanc marginalized: AMD’s stake gain story is intact, with a strong momentum in the datacenter and an increasing opportunity to expand its GPU stake, Twigg said in a note.
To reflect the strong future direction, the analyst increased his estimates for AMD.
Growth is expected to slow in 2022, as demand growth is likely to slow as the tail pandemic winds weaken and participation gains are likely to slow, he said.
“Expectations for AMD remain very high and with attractive new products and an ambitious new CEO at rival Intel, AMD’s optimistic narrative may start to weaken, limiting the rise to its aggressive multiple (~ 45x our 2022 EPS estimate) , in our opinion, “said Twigg.
“Although execution and demand are strong, we continue with the Sector’s Weight due to the high valuation and an increasingly competitive scenario.”
AMD Price Action: At the last check, AMD’s shares were down 3.98% to $ 90.94
Related link: AMD hopes to draw strength from Intel’s weaknesses, gaming console chips
Latest reviews for AMD
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Action |
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January 2021 |
Mizuho |
Keeps |
Purchase |
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January 2021 |
Loop Capital |
Keeps |
Purchase |
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January 2021 |
JP Morgan |
Keeps |
Neutral |
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