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Is AMD Stock a Buy with New Product Launches? Morgan Stanley Says ‘Not Yet’

support@smarteranalyst.com (Ben Mahaney)

Has Advanced Micro Devices (AMD) finally caught up to Intel (INTC)? If you’re buying what AMD is selling, perhaps the answer is yes.

At the company’s Next Horizon Gaming Event, Client Product Management director Travis Kirsch said, “I don’t think there’s any reason people would buy an Intel processor after we do this,” referring to the launch of the Ryzen 3000 productline, set to debut early next month. The new line of 7nm processors are expected to be more affordable, efficient and faster than comparable products from Intel, who continues to struggle with 10nm development. But besides the new product line, AMD has been making headlines for its contract with the US Government on the world’s most powerful supercomputer, as well as a return to the mobile market through an agreement with Samsung.

Though much hype is surrounding the 7nm release next month, Morgan Stanley's Adam Jonas was at E3 in Los Angeles on Tuesday when the company released its Radeon 5700 family of graphic cards. While performance was “in line with the previews given at Comptex,” and an improvement from before, the analyst said “prices were higher than...anticipated.” Though Jonas is “less cautious” on the stock, he continues “to think that full year 2019 estimates are too high in graphics.”

As such, Jonas reiterates his Equal-weight rating on AMD stock with a $28 price target, which implies nearly 13% downside from current levels. (To watch Jonas' track record, click here)

Nonetheless, there are reasons for investors to be optimistic in 2019. The release of the Radeon family, coupled with the Ryzen 3000 lineup, continue to show the tech world that AMD is a formidable challenger in multiple verticals. The company is expected to compete fiercely with Intel with the release of its 7nm chips next month, and continues eating away at Nvidia and other rivals in graphics. The recent announcement that the company would work with Cray on the world’s most powerful supercomputer has also contributed to rising sentiment — while revenue-generation isn’t expected to be massive, it signals confidence in the company. Finally, the recent partnership with Samsung to license its technology to the mobile market is expected to contribute over the next five years.

When looking at Wall Street’s stance in general, TipRanks analytics showcase AMD as a Buy. Out of 21 analysts polled in the last 3 months, 13 rate Buy on AMD stock, while 8 maintain a Hold.

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