AMD CPUs “On Par” With Intel’s Admits Wall Street Analyst In Decade-First Bullish Rating

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Chip designer Advanced Micro Devices, Inc (AMD) has received its first Buy rating from research firm Bernstein in ten years. AMD has gained market share consistently over the past couple of years over its larger rival Intel Corporation due to strong product designs and advanced manufacturing process courtesy of its primary manufacturing partner the Taiwan Semiconductor Manufacturing Company (TSMC). Bernstein's price target upgrade for AMD has halted the share price drop that took place earlier today in the wake of a global political crisis.

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Bernstein's not, which hit the airwaves earlier today saw AMD's price target increase to a whopping $150, which marks for a 32% upside over the company's closing price of $113.83 on Monday. AMD has delivered strong quarterly growth consistently for more than a year and its latest earnings report saw the company report $16 billion in revenues to mark for a meteoric 68% year-over-year increase.

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Bernstein analyst Stacy Rasgon shared his beliefs about the Santa Clara, California based semiconductor firm in a new research note. This saw the analyst upgrade AMD's rating to Outperform from Market Perform, alongside the aforementioned price target upgrade. In it, the analyst admitted that missing out on AMD was one of his firm's "biggest missed call" during the time that it has spent on Wall Street.

He also outlined that the collapse of the personal computing market and problems with U.S. chip manufacturer GlobalFoundries were factors in his firm being bearish on AMD.

An excerpt from the note, shared by StreetInsider reads:

“But time heals all wounds, and (as has frankly been abundantly clear for years) this is not the AMD of a decade ago. And with the combination of continued stellar execution, increasingly bankable earnings power, and a recent sizeable pullback making valuation (dare we say?) downright attractive we are, for the first time in almost a decade, pulling the trigger.”

Enterprise fueled AMD's growth during Q4 2021 according to the company's investor presentation.

The upgrade comes after AMD managed to successfully close its acquisition of field-programmable gate array (FPGA) designer Xilinx, Inc earlier this month. The dead adds a significant chunk of revenue to AMD's income statement and presents the company with a sizeable opportunity in the data center space. This space presents a total addressable market (TAM) of $35 billion by 2023 according to AMD's internal estimates as shared by a company through a presentation after it announced the completion of the Xilinx acquisition.

Rasgon also commented on AMD's desktop central processing units (CPUs), stating that he believes that they are now "on par" with Intel's products. Sharing his take on the Xilinx acquisition, the analyst outlined:

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"Our math suggests the company might see an annual revenue run rate that could be hundreds of millions of dollars higher than current expectations"

Competition between AMD and its only rival in the x86 computing market is heating up as Intel is moving full steam ahead with its bid to revive advanced chip manufacturer that has seen the company miss several production deadlines in the past. AMD's processors are manufactured by TSMC, which has managed to shrink transistor sizes successfully over the years. This, in turn, has made the company's products an attractive offering to a large list of customers.

However, AMD's strong growth has started to taper in some markets. For instance, a market share report for the Japanese do-it-yourself (DIY) PC market shows that Intel has retaken the lead, as AMD struggles with a historic semiconductor supply shortage that is plaguing the entire sector.