Why is Kevin Cassidy bullish on AMD?
Stifel Nicolaus analyst Kevin Cassidy has noted that the stocks of Intel (INTC) and Advanced Micro Devices (AMD) have been moving in opposite directions over the last three months, with Intel rising 9.7% and AMD falling 19%.
Intel has risen due to bullish sentiments toward its Xeon Scalable upgrade cycle. AMD has fallen, as its stock was oversold due to the cryptocurrency boom.
According to Benzinga, Cassidy downgraded Intel from a “buy” to a “hold” with a $53 price target, representing an upside of 8.6% from its current stock price. He was bullish on Intel during the Xeon Scalable upgrade cycle, but he doesn’t expect this upgrade cycle to last for the long term because data center architectures evolve, and more data centers adopt accelerators to support artificial intelligence.
On the other hand, Cassidy upgraded AMD from a “hold” to a “buy” with a $13 price target, representing an upside of 35% from its current price. He stated that investors have oversold AMD because they don’t realize the growth potentials of the EPYC server CPU (central processing unit) and the Ryzen personal computer CPU in 2018. He expects a ramp-up of the EPYC server CPU in 2H18, which could expand AMD’s gross margin to over 50% in 2018 from 34.2% in 2017.
Even if we look at Wall Street’s median and bullish estimates, AMD has higher growth potential than Intel compared to where the two stocks stand today. AMD’s median price target of $14 represents an upside potential of 46%, and its bullish target of $27 represents an upside potential of 181%. On the other hand, Intel’s median and bearish targets represent upside potentials of 12.7% and 43.5%, respectively.
AMD’s Ryzen and EPYC CPUs face some security concerns, but they’re unlikely to affect its stock price. We’ll look into this next.
CTS Labs disclosed to Advanced Micro Devices (AMD) vulnerabilities in its chipsets that would only occur if the attacker had administrative access to the system.
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