A recent report highlighted that Advanced Micro Devices Inc. stock could head to $17 next. But, Can AMD stock continue to soar.
Shares of Sunnyvale, California-based Advanced Micro Devices, Inc. (NASDAQ:AMD) seem to be on a recovery path after the Ryzen release sell-off gaining almost 7% in the last five trading sessions. In the last trading session alone, AMD stock was up by more than 4% on account of the news of AMD stock being added to S&P 500 (INDX:SPAL). Our earlier coverage on AMD stock had cautioned investors not to write off AMD stock too early. And as things stand, a recent report suggests the next stop for AMD stock could be $17 a share. After gaining more than 450% in the last 12 months, is it too much to expect AMD stock to head to $17 now?
Canaccord Genuity Hikes AMD price-target to $17
A recent Barron's post reports that analysts Matthew Ramsey and Logan Bender from Canaccord Genuity upped their price target for AMD stock to $17 from $14 reiterating a buy rating on AMD stock. Previously, they had raised AMD stock price target to $14 on Feb 1st. The duo's bullish thesis on AMD stock is based on positive meetings with CEO Dr. Lisa Su and their assessment of management being highly focused and steady. Their thesis is driven by two major factors, one being the re-emergence of AMD as a strong competitor (second place after the Chipzilla) to Intel (NASDAQ:INTC) in several segments and sub-segments on account of the Zen based roadmap. The other factor being the GPU market share recovery with Polaris and the upcoming Vega GPUs in all tiers of the market. To add to that, they believe AMD is well focussed on delivering a multi-generational roadmap as the company has the required customer backing and foundry partners support. Even modest assumptions to capture a share of the $50B+ TAM drives their estimates above the analyst consensus. Some of the factors discussed above seem to be already priced into AMD stock. Now, it all depends on the upcoming Vega and Naples launches to drive AMD stock higher
A Lot Is Riding On The Vega And Naples Launches.
AMD stock, in the last twelve months, had largely been driven by speculation around its upcoming products. With Ryzen factor already priced in, the next catalysts for AMD stock are expected to come in the form of its Vega and Naples products. We had previously covered the Naples server CPU preview and what lies ahead of AMD on the basis of the Naples server CPUs. To add more on the Vega front, a post on Wccftech reports that AMD's RX Vega GPU was spotted in third party benchmarks. These benchmarks concern the compute performance and are not indicative of the gaming performance. The leaks suggest AMD RX Vega's TDP is slated to be around 225W, compared to 250W for the NVIDIA (NASDAQ:NVDA) GeForce GTX 1080 Ti. The SiSoft benchmark suggests the RX Vega sampled showed 9414Mpix/s of half-float GP compute performance, beating GTX 1080 Ti by around 1863pix/s. It is also reported that AMD dominated Nvidia's GTX 1080 in terms of double-float GP compute performance as well with 806Mpix/s compared with the latter's 565Mpix/s compute performance. Thes leaks also speculate that, as this sample is based on 2048-bit memory bus (half that of the 4096-bit memory bus on the Fury X), this could only be the 'Little' Vega, and a much bigger and better version may be on the cards.
After the Ryzen gaffe, all these leaks should be taken with a grain of salt and it is still not very clear how well AMD's RX Vega series GPUs will compare to Nvidia's GTX 1080 and 1080 Ti series GPUs. However, one thing is clear that AMD is aiming to make Vega competitive outside of the gaming marketplace going by the initial performance benchmark leaks. Also, according to Wccftech, AMD is working on improving RX Vega clocks as well to give the 1080 Ti a run for its money. As discussed above, for AMD stock to reach a $17 price target, one factor which is crucial is GPU market share recovery, which largely hinges on the success of Vega. The initial leaks look promising as AMD is trying not to limit its GPU performance to gaming alone, also targeting growth segments like AI, automotive market etc where NVIDIA is the leader.
Short Sellers Are Unsure On AMD Stock.
AMD stock was recently trading near its 10-year high price of $15.55. Even then, AMD stock witnessed a drop in shares shorted which decreased to 104.61 million from the previous level of 105.63 million shares, in the latest report. This was a drop of 1% in shares being shorted. However, the shorted shares still make up 12.7% of the float of AMD stock and it is one of the most shorted Nasdaq stocks. The lack of confidence of short sellers does suggest it is too early to write off AMD stock and it may be headed for higher grounds. $17 as the next stop for AMD stock cannot be ruled out.
Putting It All Together.
AMD stock might have hit a bump due to the not- so positive Ryzen reviews after launch. However, AMD's management seems to be focussed on delivering highly competitive products. This makes the Vega and Naples launch much more interesting. These upcoming launches are the likely growth catalysts for AMD stock and initial feedback looks very promising. With Goldman Sachs (NYSE:GS), an investment major, also buying a stake in AMD shares, gives more confidence that AMD stock is headed higher. AMD stock remains a good buy.
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