Shares of Advanced Micro Devices Inc. are on pace to post their best quarter since 1991, but the finish won’t come without a little drama.
AMD’s AMD, -5.30% stock AMD, -5.30% was trading 5% lower in Friday’s session, the last trading day of the quarter, after rival Intel Corp. INTC, +3.11% issued an update on supply issues as well as progress on the company’s 10-nanometer chips. Shares of AMD are still up 106% quarter to date, and they’re on track to post their largest quarterly gain since the March 1991 quarter, when the stock rose 115%.
Part of the bull case for AMD touches on missteps at Intel, and the company’s Friday commentary strikes some as a slightly more upbeat picture of its current situation. In an open letter, Intel interim Chief Executive Bob Swan said that the company still expects to have “at least” enough supply to meet its full-year revenue target, and he also shared that the company was “making progress” on 10-nanometer.
“Yields are improving and we continue to expect volume production in 2019,” Swan said.
See more: Intel expects to meet full-year outlook amid supply constraints, AMD stock falls
The other part of Intel’s statement concerned the new chips on the horizon. Intel has generally been steps ahead of AMD with its technology, but it’s faced delays with 10-nanometer technology at a time when AMD has been executing well. Bulls have argued that AMD is poised to capitalize on Intel’s stumbles with its own 7-nanometer server CPU and erode Intel’s longtime advantage.
Read: AMD stock reflects ‘irrational expectations,’ analyst says
Bernstein analyst Stacy Rasgon wrote that AMD’s stock drop in the wake of the latest Intel commentary was “somewhat interesting” given that Intel’s note “does not preclude the possibility that AMD could in fact be benefiting from the current situation.” Intel said it was focusing on higher-performance processors and that its supply was still “tight” at the entry level.
“As AMD’s processors in general still tend to be cheaper anyway, the possibility exists that they could still have an opening in the current environment,” Rasgon wrote.
While Intel’s latest statement didn’t contain any new information about 10-nanometer, Wells Fargo analyst Aaron Rakers could see why it was seen by Wall Street as a positive for Intel amid “continued questions around the 10-nanometer ramp” and 14-nanometer supply issues.
The Intel commentary dented AMD’s rally, but the stock is still on track for its fourth best quarterly performance in a 46-year run as a public company. The rally has been fueled by the expectation that AMD is picking up share in desktop and laptop chips and server products, as well as heightened optimism on the part of the most bullish Wall Street analysts.
At least three analysts have boosted their AMD price targets to $40, the highest target listed on FactSet, but sentiment toward AMD remains mixed. Of the 33 analysts who cover the shares, 14 have buy ratings, 14 have hold ratings, and five have sell ratings. The average price target is $24.29, which is 22% below current levels.
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