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Is AMD worth investing in right now?

Analysts are split on Advanced Micro Devices, whose shares have surged nearly 100% this year.

Source: Bloomberg
  • AMD’s stocks are up nearly 100% this year, driven by Covid-19 tailwinds
  • Deutsche Bank raised its price target to US$90 from US$75 on Thursday (17 December)
  • However, the firm kept a ‘hold’ rating, stating that any recovery expectations have already been priced in
  • Meanwhile, Bank of America and Rosenblatt remain bullish on the stock

AMD stock price: what’s the latest?

Advanced Micro Devices Inc’ (AMD) shares closed flat at US$96.84 each on Thursday (17 December 2020), as US lawmakers continued negotiations for a US$900 billion stimulus deal.

Year-to-date, the stock is up almost 100%, having opened at US$49.10 on the year’s first trading day.

Where do analysts see AMD’s share price next year?

In terms of stock predictions, Deutsche Bank analyst Ross Seymore raised his price target on AMD to US$90 from US$75 on Thursday.

However, the analyst kept a ‘hold’ rating on the shares, stating that while a post-Covid recovery in fundamental semiconductor revenue growth is expected in 2021, ‘much of this goodness’ has already been priced into share prices.

Seymore further warned that post-Covid ‘normalisation’ may result in the semiconductor sector being ‘a source of capital rather than a destination for it’.

More upbeat was Bank of America (BoA), whose latest new Steam graphics processing unit (GPU) data indicated that AMD - alongside rival Nvidia - could be headed for an even bigger fourth quarter revenue showing.

BoA analyst Vivek Arya wrote in a recent client note that the release of new gaming consoles from Microsoft and Sony have helped to boost a GPU upgrade trend among PC users and gamers.

Specifically, he said the adoption of the latest 6000 series GPUs will likely spearhead a move towards more powerful GPUs in the medium term.

In light of these factors, Arya said AMD - along with Nvidia - remains his top GPU equity picks, citing the stock’s exposure to massive, secular growth trends such as high-end gaming, artificial intelligence, advanced autos and cloud computing.

AMD CEO: Q1 2021 sales tracking ‘better’ than previous years

Earlier this month, Rosenblatt analyst Hans Mosesmann also gave a vote of confidence on AMD, as he reiterated a ‘buy’ rating on the stock, alongside a US$120 price target.

Mosesmann’s call was published after AMD CEO Lisa Su said on 30 November 2020 during the Credit Suisse 24th Annual Technology Virtual Conference that she expects AMD’s first quarter of 2021 to outperform previous years.

The company tends to experience a 10% revenue drop between the fourth and first quarters, based on prior years’ performance. However, thanks to the Covid-19 pandemic, Su said this year’s Q1 sales are so far performing a ‘little bit better’ than usual.

Mosesmann subsequently increased his Q1 FY2021 revenue and non-GAAP earnings per share (EPS) estimates for AMD from US$2.56 billion and US$0.34 up to US$2.73 billion and US$0.40, respectively.

He also increased the full-year revenue forecast for 2021 from US$12.3 billion to US$12.5 billion, with the non-GAAP EPS estimate increased to US$2.18 from US$2.10.

How to trade AMD with IG

Are you feeling bullish or bearish on AMD’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Advanced Micro Devices> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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