It seems as though in the last two weeks, Advanced Micro Devices (NASDAQ: AMD) would get an analyst price hike in the $30 - $40 range. Where were these analysts when AMD stock traded at $1.75? At these levels, AMD could be at risk of profit-taking on valuation alone. The stock trades at a 50 times forward P/E.
Argus called AMD stock a "buy" again but raised its price target from $23 to $40. On Sep. 13, FBA initiated an ‘outperform’ and a PT $40 on the stock. AMD stock now trades at a premium to Nvidia (NASDAQ: NVDA) – forward P/E 34.6x – and Intel (NASDAQ: INTC) – forward P/E 10.65x. Intel deserves the low valuation due to its desktop CPU delays but has plenty of cash flow growth from its existing business strength in servers and desktop.
Intel also has growth potential in the FPGA market (through its Altera acquisition) and ADAS (through its Mobileye buyout).
AMD now has little room to disappoint as it develops a market for EPYC on the server front. On the desktop side, Ryzen 2’s refresh could get better sales momentum. The back to school seasonality and the inclusion of the chip from OEMs will help AMD report better revenue numbers in the quarters ahead.
