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Wall Street Weighs In On AMD's Strong Q2 And What Lies Ahead

AMD's Q2: What Does Wall Street Think? NASDAQ:AMD

Advanced Micro Devices, Inc. AMD 4.68% shares surged 8 percent on Wednesday after the company reported a Q2 earnings beat and issued strong guidance for the remainder of the year.

A number of Wall Street analyst weighed in on AMD following the report. Here’s a rundown of what they had to say.

Gains From Intel

Bank of America analyst Vivek Arya said AMD gaining server chip market share from Intel Corporation INTC 0.29% is the biggest potential risk and reward for investors.

“The biggest element of our thesis is AMD achieving 5%+ (our model) and potentially 10%+ share (bull-case) in the $20bn server market vs Intel,” Arya wrote.

See Also: Advanced Micro Devices Hits 10-Year High After Q2 Beat

Upside Limited

Citi analyst Christopher Danely said upside is limited for AMD until the company can actually deliver profitability to justify its valuation.

“AMD’s valuation is near an all-time high at 2.8x C18 sales despite the company losing money as it remains confined to low end, low margin products,” Danely wrote.

Loop Capital analyst Betsy Van Hees said AMD’s upside is likely limited until the company can deliver consistent profitability.

“We believe with full-year 2017 revenue guide implying Q4 to be down -10+% QoQ, benefits from the cryptocurrency craze to likely cool off in Q4, and expectations appearing very set for market share gains from RYZEN, Vega, and the new server chip EPYC that a lot is already priced in here,” she wrote.

More Downside Ahead?

BMO analyst Ambrish Srivastava said there is more downside risk for AMD shareholders that upside potential at the current share price.

“While we laud AMD for near-flawless execution on its product road map, and expect the company to take share in all the new markets it is targeting, we just do not see meaningful ensuing earnings,” Srivastava wrote.

EYPC, Ryzen Should Lead To Growth

Baird analyst Tristan Gerra said positive EPYC feedback and data center wins suggest major growth opportunities in years ahead.

“EPYC and Ryzen design wins combined with a rapidly growing GPU TAM should drive double-digit revenue and EPS growth for AMD over the next few years, in our view,” Gerra wrote.

Ratings And Price Targets

Despite the strong quarter, Wall Street is still divided on the outlook for AMD stock:

  • Bank of America has a Buy rating and $18.00 target.
  • Citi has a Sell rating and $5.00 price target.
  • BMO has a Market Perform rating and $15.00 price target.
  • Baird has an Outperform rating and $20 price target.
  • Loop Capital has a Hold rating and $14 price target.

Image Credit: By Rico Shen, CC BY-SA 3.0, via Wikimedia Commons

DateFirmActionFromTo
Jul 2017BairdInitiates Coverage OnOutperform
Jul 2017BMO CapitalDowngradesOutperformMarket Perform
Jun 2017Longbow ResearchInitiates Coverage OnNeutral

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