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Why Advanced Micro Devices (AMD) Stock Hit New High Monday

Benjamin Rains
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Advanced Micro Devices AMD saw its stock price pop over 5% on Monday to hit a new 11-year high on the back of positive analyst sentiment, which also pointed directly to its ability to compete against chip giant Intel INTC.

AMD stock touched $17.34 per share on Monday, a new 52-week high. The move comes after Cowen analysts raised their price target for AMD from $18 per share to $21 per share, citing opportunities in cloud computing. The analysts also reiterated their “outperform” rating for AMD. “Along with recent announcements of new server deals with Cisco CSCO/Tencent TCEHY and the crystallization of our 7nm AMD versus 10nm Intel thesis, we are increasingly confident in upside to AMD shares," analyst Matthew Ramsay wrote in a note to clients last Thursday. “We’ve come away with a more entrenched and bullish view of AMD’s execution and potential share gains in PC/server CPUs.”

Ramsay believes that AMD’s transition to its brand new 7nm AMD Radeon Vega GPU products, which are set to launch at some point in 2018, will be hugely beneficial. AMD’s second generation Ryzen Threadripper processors will debut in the third quarter of 2018.

Earlier this month, AMD said at Computex that there will be 60 new Ryzen systems by the end of the year from manufacturers. The company is also hopeful that it can gain 40% market share from online retailers.

For years Intel has grabbed a large share of the chip sales that power the desktop and notebook PC markets. Now, Intel’s dominance seems to be fading a little bit. Northland Capital Markets analyst Gus Richard downgraded Intel stock to “underperform” on Monday and slapped a price target that fell 20% below INTC’s closing price on Friday.

AMD investors should be excited to note that the reason for Richard’s bearish Intel take comes from a more formidable challenge from AMD. “The performance gap between Intel and AMD has narrowed substantially,” Richard wrote. “AMD is now well positioned to compete in desktop and notebook markets.”

AMD’s gains turned out to be Intel’s losses. Intel saw its stock price sink 3.43% to close at $53.22 per share on Monday.

Price Movement

Now that we have discussed the reasons for AMD’s climb, it’s worth taking a look at its performance over the last few years, since it is pretty impressive.

 

Shares of AMD have skyrocketed 562% over the last three years, which crushes its industry’s roughly 111% climb and the S&P 500’s 32% growth. Investors will notice that AMD stock has been somewhat turbulent over the past two years. With that said, shares of AMD have soared nearly 50% over the last three months, topping the likes of Micron MU and Nvidia NVDA.

AMD is currently a Zacks Rank #3 (Hold) that is expected to see its quarterly revenues surge by nearly 41% to hit $1.72 billion, based on our current Zacks Consensus Estimates. Meanwhile, its quarterly earnings are projected to jump from $0.02 per share in the year-ago period to $0.12 per share, which would mark a 500% climb.

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