AMD Stock Rally Continues

Adrian Ip
Posted Jun 17, 2016
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AMD (NASDAQ: AMD) stock continues its rally this year and is up ~9.8% on the day. As many of you may recall, AMD stock jumped significantly this year with the expectation of multiple new offerings both in CPU and GPU technology in Zen and the much vaunted Polaris range bringing greater performance per watt and per dollar.

As we’ve been hearing recently, AMD will be touting Polaris on the basis of the democratisation of VR with the cheapest cost of entry into the PC VR space when its Polaris range of GPUs launches in a little under two weeks. The RX 480 being a fully VR capable card at under $200 with minimum VR spec cards expected to come in the form of the RX 470 at even less than this.

Well, as you guys have no doubt been following from our site, Polaris is getting closer to launch and Lisa Su is also on a charm offensive, talking up AMD’s game and explaining how AMD will reap the benefits of its multi-year investment program. You can see her chatting with CNBC earlier today here.

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Additionally, brokerage house Canaccord Genuity has upgraded its rating on AMD stock to buy from hold, while at the same time raising its price target to $6, which doesn’t seem too high given that we’re over $5.20 right now and nothing has launched yet.

The large majority of analysts still have AMD as a Hold with a median price target of $3.50 and a mean of $3.82, although Jefferies also upgraded their recommendation to a buy on the 13th with a price target of $5.50.

This is the way the cookie crumbles. It’s a good bet that as we get closer to and past Polaris launch, we will see an increasing number of analysts nudge their recommendations up. As we all know, liquidity follows liquidity and AMD are riding high on current expectation.

Don’t get too excited, although the company looks like it may be turning the corner, a lot of debt remains on the books and we need to see how well Polaris actually performs and is received, but it would likely be a foolish move to bet against AMD on balance of the current data.

As many of our readers will know, the GPU market is an incredibly segregated one with price/performance pitches at multiple levels. Although some on other sites will talk books and downplay significance, market share is important and if AMD is able to maintain a good margin of around 30% with Polaris while gaining discrete GPU market share, we view this as a solid return to form.

Ethics:

I do not currently hold AMD stock.

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