Shares of Advanced Micro Devices Inc. are soaring in Wednesday morning trading after Instinet began coverage of the stock with a buy rating.
Analyst David Wong is encouraged by several aspects of AMD’s AMD, +10.02% business, including its “solid” positioning in the x86 microprocessor and standalone GPU markets. “We contrast this with competitors Intel and Nvidia NVDA, +3.63% which are each dominant in only one of the microprocessor/GPU markets,” he wrote in a note to clients.
Opinion: How a new crop of tech IPOs may steal sentiment from FAANG stocks
Wong sees potential for AMD to pick up market share in both microprocessors and GPUs. He predicts that the company could achieve greater than 10% share in x86 datacenter processors, 15% to 20% share in desktops and notebooks and greater than 30% share in desktop and mobile GPUs.
“We believe that further share momentum, as well as favorable mix, will help drive AMD’s sales growth through 2019, 2020, and beyond,” wrote Wong, who set a $33 price target on the shares.
Profitability is also a key lever in Wong’s view, as he writes that “a return to sustainable profitability” could help give shares a boost. In the next few years, he sees an opportunity for AMD to show earnings power of $2 a share. The company generated 46 cents in annual EPS in 2018.
Wong began coverage of peer Intel Corp.’s shares INTC, +2.47% as well on Wednesday, labeling the stock a buy. He likes the company’s potential in artificial intelligence and autonomous driving.
Read: Intel gets CFO Davis from Qualcomm
“Intel’s autonomous driving sales (Mobileye) could grow from $700mn in 2018 to more than $1.5bn by 2021, based on continuing growth in the Mobileye EyeQ3 and ramping sales of Intel’s EyeQ4 product,” he wrote. Wong assigned a $65 target price to Intel’s stock, which is up 2.1% in morning trading.
Opinion: With Intel CEO choice, the bean counters are in charge of Silicon Valley’s most storied tech company
AMD shares have gained 69% over the past three months, while Intel’s stock has risen 25% and the S&P 500 SPX, +0.47% has jumped 18% in the same period.
