AMD Stock Rises on Intel’s Troubles

AMD stock has hit a 12-year high, rising 182% year-to-date. In contrast, the Market Vectors Semiconductor ETF (SMH) has risen 6.7% YTD.

Puja Tayal - Author

Nov. 20 2020, Updated 4:33 p.m. ET

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AMD stock in bullish territory

Advanced Micro Devices (AMD) has been a long-time underdog in relation to market leader Intel (INTC). However, times are changing, and the underdog is emerging as a strong competitor that can gain market share from the market leader.

Investors are reacting to this opportunity, sending AMD stock to a 12-year high. AMD stock has risen 182.0% YTD (year-to-date), well ahead of the Market Vectors Semiconductor ETF’s (SMH) YTD increase of 6.7% and the 15.7% YTD increase reported by the NASDAQ-100 Index (NDX-INDEX).

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This stock rally occurred in July when Advanced Micro Devices (AMD) stated that it plans to take some server processor market share from Intel in 2018 and 2019. During the same timeframe, Intel delayed its 10nm (nanometer) node to the holiday season of 2019. These events led Wall Street analysts to become bullish on AMD, as a new window of opportunity appeared for the chip supplier to gain PC processor market share from Intel in 2018.

Factors favor AMD

AMD’s original strategy for 2018 was to launch competitive products in the high-end PC and server CPU (central processing unit) markets. AMD is executing well on its product roadmap and is benefiting from this strategy. However, the company is gaining an additional advantage as Intel—its only competitor—is encountering some rough road. As the two companies operate in a duopoly market, one’s loss is the other’s gain.

Jefferies analyst Mark Lipacis raised his price target for AMD from $30.00 to $36.00, as Intel is facing supply constraints for its high-end commercial PC CPUs. This trend has given AMD an opportunity to gain market share.

Stifel analyst Kevin Cassidy raised his price target for AMD from $21.00 to $38.00. He stated that Intel has delayed its 10nm node and that the company has struggled to meet the demand for its current 14nm node. However, AMD is executing well on its 7nm products that are scheduled to launch by the end of 2018.

In this series, we’ll look at these additional opportunities that have favored AMD in this competitive environment.

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