Advanced Micro Devices, Inc. (NASDAQ: AMD) shares ended Wednesday's session at a record closing high of $58.90, bringing up the total year-to-date gain to 28.4%. The record run has pushed an analyst at Wells Fargo to the sidelines.
The AMD Analyst
Aaron Rakers downgraded AMD from Overweight to Equal-Weight and increased the price target from $55 to $64.
The AMD Thesis
Wells Fargo is positive on AMD's competitive positioning and share gain story, but shares are approaching levels that present a more balanced risk-reward profile, Rakers said in a Thursday note.
Based on a 2022 sum-of-the-parts analysis, shares could still present upside into the mid-$60/share range. With the new price target of $64 presenting a sub-10% upside opportunity, the analyst deemed it fit to move to the sidelines.
With the March 5 Analyst Day in mind, Rakers presented an analysis based on his expectation the company will unveil a new revenue segmentation to improve visibility into growth drivers.
Potential Revenue Segmentation
The analyst estimates that Data Center accounted for 13-15% of 2019 revenues, with 70-80% of it coming from EPYC Server CPUs and 20-30% from Radeon Instinct GPUs.
AMD could give more details on a Data Center GPU roadmap at the Analyst Day, Rakers said.
The Computing segment, according to Rakers, accounted for 65-70% of 2019 revenues, with the break-up being about 70% from client CPUs and about 25-30% from Radeon GPUs and about $130 million coming from Samsung IP license.
Semi-Custom revenues stood at about 12% of AMD's revenues in 2019, the analyst said.
AMD Price Action
AMD shares were slipping about 1% to $58.35 at time of publication..
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Latest Ratings for AMD
|Feb 2020||Wells Fargo||Downgrades||Overweight||Equal-Weight|
|Feb 2020||RBC Capital||Maintains||Outperform|
View More Analyst Ratings for AMD
View the Latest Analyst Ratings
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