Advanced Micro Devices, Inc. (NYSE: AMD), Intel Corporation (NASDAQ: INTC) – Why the transition from Intel CEO is negative to AMD: analyst

Intel Corporation (NASDAQ: INTC) the shares reacted positively to the company’s announcement about the appointment of VMware, Inc. (NYSE: VMW) Pat Gelsinger as its CEO.

In a movement of sympathy, shares of rival chip maker Advanced Micro Devices, Inc. (NASDAQ: AMD) has backed down, as investors consider Intel’s stock negative for the company.

The AMD analyst: BMO Capital Markets analyst Ambrish Srivastava downgraded AMD from Market Perform to Underperform and reduced the target price from $ 80 to $ 75.

The AMD Thesis: AMD did a “tremendous” job under the leadership of Lisa Su, Srivastava said in the downgrade note.

The valuation of AMD’s shares reflected the near-perfect execution under Su, the analyst said.

Intel’s mistakes opened up a “blue sky” scenario for AMD, helping it gain market share at Intel’s expense, further raising its valuation, he said.

Related link: AMD analyst projects strong start in 2021 for chip maker

Gains from AMD’s stake in servers are likely to be moderate in 2020, and as a result consensus estimates will be optimistic, said Srivastava.

BMO said its target price assumes that AMD will continue to trade with a rich valuation, although lower than what it is currently trading.

The target price assumes that AMD shares are traded at a PE multiple of 35 times the company’s 2022 calendar year EPS estimate of $ 2.15.

AMD Price Action: AMD shares lost 1.08% on Thursday, closing at $ 90.79, after falling 3.8% on Wednesday.

Related link: Options trader bets $ 2 million on advanced micro devices after CES presentation

Photo: VMWare.