Is AMD Stock’s Magical Run Coming to an End?
Advanced Micro Devices, Inc. (NASDAQ:AMD) gained another three percent in yesterday’s trading, on the back of a huge “double-upgrade” for AMD stock from analysts at Bank of America Merrill Lynch (BAML) to a “buy” rating.
“[B]etter late than sidelined,” wrote the company regarding its push for AMD stock. And it is definitely late. To anyone not paying attention, AMD stock has catapulted into the stratosphere this year, jumping by 272% since the beginning of 2016 and 60% in the past 30 days alone. (Source: “AMD Stock Upgraded Two Notches To Buy: BAML,” ValueWalk, December 12, 2016.)
Yes, times are good at AMD stock, and BAML is finally joining the bandwagon supporting the chip producer. The upgrade is a result of the chipmaker being in a unique position to address a $50.0-billion total addressable market. BAML also raised its price target for AMD stock from $5.00 to $12.00 per share, with a $15.00 per share and a $7.00 per share as bull and bear cases, respectively.
There are a bunch of growing markets that AMD stock would be able to take advantage of, including VR, video games, PCs, AI, and a whole bevy of other potential uses for the chips.
In fact, the BAML team feels that AMD stock is precisely valuable because it is the only company that can challenge giants Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA) in their respective markets. With AMD stock’s relative foothold in those markets low, at less than a five percent value share, any headway would therefore be a big boost to the company.
But there are, of course, detractors. Most of Wall Street is taking a more cautious approach, with only 25% of analysts rating AMD stock as a “buy.” A lot of this apprehension comes from past failures in the company, in addition to high levels of debt and strong competition in Intel and NVIDIA. But they also suggest that the markets that they’re growing in still have much room themselves to expand. (Source: “Why Advanced Micro Devices, Inc. (AMD) Stock Will Lose Its Wings
, December 12, 2016.)
In any case, whether you’re pro-AMD stock or think it’s headed for a crash, one thing that can’t be denied is that 2016 has been a wonderful year for the chipmaker.