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AMD: Analysts’ Recommendations after Its Q4 Earnings

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Jan. 31 2019, Published 1:27 p.m. ET

Analysts’ recommendations

Among the 33 analysts covering Advanced Micro Devices (AMD), 13 recommended a “buy,” 17 recommended a “hold,” and three recommended a “sell.” Analysts have set a target price of $24.17 for the stock and a median consensus estimate of $25.00. Advanced Micro Devices is trading at a 4.5% discount to its consensus median target estimate.

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Strong revenue outlook

On January 29, Advanced Micro Devices posted disappointing fourth-quarter results. The company expects soft revenue growth for the first quarter due to weak semi-custom sales and a continued decline in the demand for the cryptocurrency. NVIDIA (NVDA) is also suffering from the loss in cryptocurrency demand. NVIDIA expects graphics sales to decline due to excess channel inventory, the absence of blockchain-related GPU revenues, and lower memory sales. However, Ryzen, EPYC, and Radeon datacenter GPU product sales are expected to increase YoY (year-over-year) in the first quarter.

For 2019, Advanced Micro Devices expects the revenues to increase in the high-single-digit range on a YoY basis due to high-margin Ryzen, EPYC, and Radeon datacenter GPU product sales. Analysts expect a 5.5% growth rate in the revenues in 2019.

According to J.P. Morgan, Advanced Micro Devices is expected to drive the CPU revenues and market share in 2019 for its client PCs and Servers segments. According to Cowen, Advanced Micro Devices would compete evenly with Intel (INTC) in 2019 across the PC and CPU markets. Cowen also expects Advanced Micro Devices to gain on its 7-nanometer product amid Intel’s supply shortages related to its 10- nanometer processor chips. Advanced Micro Devices might overtake Intel with its new and high-margin products for servers, notebooks, and desktop PCs.

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