Advanced Micro Devices (NASDAQ:AMD) enjoyed a strong rally throughout 2019. One problem remains: the decisive rally to $41.79 last week ended quickly. Valuations continue to get stretched, leaving AMD little room to disappoint on revenue growth. What matters more in the near-term: the analyst downgrade and $36 price target or the new launch of a 7nm workstation GPU?
Northland Securities downgraded AMD on Nov. 21 and set a $36 price target. Trading volume is heavy each day that the stock could fall to that level in the near-term. On Oct. 28, the stock traded at $28 but Northland still had a $36 target. The company does not report holiday sales until sometime in January of next year. In effect, the downgrade adds to unnecessary noise that hurt the stock price.
On Nov. 19, AMD launched its 7nm Radeon Pro W5700. The GPU will target 3D designers, architects, and engineers. At $799, the product should win plenty of customers who demand powerful processors. Nvidia (NASDAQ:NVDA) enjoyed the professional GPU space for too long. Any market share loss for Nvidia will give AMD stock a lift. At $210, Nvidia has a $131.5 billion market cap. AMD is valued at below $44 billion.
As GPU sales grow, that gap will narrow.
