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AMD stocks rise to record after outlook contrasts with Intel’s ‘faceplant’

The stock of Advanced Micro Devices Inc. rose to new records on Wednesday after the chip company’s strong second quarter and outlook brought about a massive change in the semiconductor market following the announced delays of Intel Corp. last week.

+ 11.35%
shares rose by more than 12% in early morning trading and opened at $ 75.50, easily surpassing Monday’s record high of $ 69.28.

At the end of Tuesday, AMD was above Wall Street’s estimates for the quarterly results and outlook, boosting the full-year outlook that was considered optimistic even before the COVID-19 pandemic.

Analysts raised their AMD revenue estimates on average from $ 2.41 billion to $ 2.49 billion for the third quarter, after AMD predicted revenue from $ 2.45 billion to $ 2.65 billion. For the year, Wall Street posted sales of $ 8.72 billion, compared to a previous estimate of $ 8.4 billion, after AMD had forecast annual sales of approximately $ 8.88 billion.

Susquehanna Financial analyst Christopher Rolland has upgraded AMD to a positive neutral rating because the company “benefited from Intel’s 7nm faceplant.” Rolland also raised its price target from $ 64 to $ 85.

Rolland referred to last week’s surprising announcement that Intel Corp. INTC,
delayed the release of its 7-nanometer chips until at least the end of 2022 due to manufacturing issues. In parlance, nanometer or nm refers to the size of the transistors going on a computer chip, with the general rule that smaller transistors consume power faster and more efficiently. AMD, on the other hand, already sells 7-nm chips and has released more and more versions of it in 2020.

As a result, Rolland sees AMD gaining a 20% share of servers by 2023, following an announcement from the company that it has achieved its goal of “double digit” server market share. By 2023, Rolland also sees AMD conquering 35% of the notebook market, compared to the current 20%; 40% of desktops, up 20%, and 10% of data center GPUs, up 3% today.

Read:AMD is set up for the blockbuster second half, but it is not guaranteed

Of the 36 analysts that cover AMD, 14 have considered or have ratings, 19 have hold ratings, and three have sell ratings. Of those, 20 have raised their price targets on the stock, resulting in an average price target of $ 70.68, up from an average of $ 55.48, according to FactSet data.

Jefferies analyst Mark Lipacis, who has a buy score and raised his price target from $ 63 to $ 86, called the second quarter a “turning point” for AMD in that he expects AMD’s gains on Intel to accelerate.

Cowen analyst Matthew Ramsay, who has an outperform rating and raised his $ 65 price target to $ 90, said AMD’s “strong results and (more importantly) consistency of product execution contrasted sharply with Intel’s roadmap.”

“While significant progress has been made so far, we believe that AMD’s market share is only beginning to emerge with 7nm server, desktop and GPU products all launched in the past quarters and 7nm notebooks even more recently” said Ramsay.

Oppenheimer analyst Rick Schafer said in a note entitled “Let the Games Begin!” That AMD was a “compelling growth story”, but that he would wait on the sidelines because of the high valuation of the stock. Schafer has a performance rating on AMD.

Schafer warned that while he believes AMD may continue to increase its share of the server market, “further gains may be limited given the tight 7nm availability” at Taiwan Semiconductor Manufacturing Co. TSM,
+ 2.71%,
that produces AMD’s chips.

At the end of Tuesday, AMD stocks were up 47% for the year, compared to an 11% rise for the PHLX Semiconductor Index SOX,
+ 1.27%,
a profit of 16% for the technically demanding Nasdaq Composite Index COMP,
+ 0.98%,
and unlike a 0.4% decrease for the S&P 500 index SPX,
+ 0.67%