When analyst Hans Mosemann at Rosenblatt set a $27 price target (44 percent upside at the time), the stock responded immediately: AMD closed at $24.32 last week after-hours. Can anything stock AMD stock now? Intel (INTC) handed over the market to AMD by delaying the release of the next-generation CPU. AMD’s Ryzen is all but guaranteed to take 10 – 25 percent market share.
The analyst said: We believe 4Q17 was an inflection point in CPU market share (AMD up mid-teens q/q and well over 50% y/y), that will continue in 2018. Further, OpEx of 28 percent in 2018 suggests profit growth accelerating above the market’s current expectations.
Are markets Pumping AMD Stock?
AMD’s incredible 133% YTD is long overdue. Intel is looking feeble, up only 3.25 percent in the same period. A leadership vacuum at Intel, after the CEO was fired, will distract the company and potentially give AMD room to take more of the market. But the desktop market is both saturated and growth limited. So AMD’s Ryzen market share growth will only add so much. EPYC is a contender in the server space which Intel must respond to.
With AMD stock trading at nearly 40x forward earnings compared to 11 times with Intel, AMD really cannot report any slowdown in revenue growth. And Intel needs to hire some strong leadership to get discrete GPUs out in 2020 and refreshed desktop CPUs out in early 2019, not later next year.
