AMD stock is an attractive buying opportunity after its big drop this year, according to Morgan Stanley.
On Wednesday, analyst Joe Moore resumed coverage on Advanced Micro Devices (ticker: AMD) with an Overweight rating and a $103 price target. AMD shares rose 0.8% to $84.47 Wednesday afternoon.
“After the recent selloff, AMD offers potential for solid numbers at a reasonable valuation, with probably the best chance in our coverage of achieving consensus numbers this year and next,” he wrote.
The analyst cited AMD’s strong record of market share gains against its chief rival Intel (INTC), and said the company has been better-positioned in the higher-end and more profitable areas of the market—including gaming, notebooks, and enterprise.
“AMD continues to execute on its product roadmap while Intel attempts to regain its footing and deliver long awaited server product,” Moore wrote.
AMD’s high-end server-chip business has been thriving. Last month, the chip maker said revenue from its EPYC server processor business more than doubled during the March quarter. In comparison, Intel reported 22% year-over-year growth for its data-center server unit for the same period.
And earlier this month, an Intel executive revealed the company’s next-generation server processor would ramp up later than planned because the company needed more product validation time. That should also benefit AMD.
Of course, it has been a difficult year for chip stock investors. Fears about a weakening PC market and a slowing global economy have hurt AMD’s stock price, too. Its shares are down about 40% this year, compared with a 33% drop for the iShares Semiconductor ETF (ticker: SOXX), which tracks the performance of the ICE Semiconductor Index.
But there’s a bright side. According to Morgan Stanley, the pullback makes AMD a better purchase with its lower valuation.
Write to Tae Kim at [email protected]
