Advanced Micro Devices, Inc. AMD 0.09% stock has tanked more than 21 percent in the past month after the company said it expects a 15-percent sequential drop in revenue in the fourth quarter. But while AMD’s weak guidance sent some investors running for the hills, at least one Wall Street analysts says it’s time to buy the dip.
The Analyst
Bank of America analyst Vivek Arya maintains a Buy rating and $18 price target for AMD stock.
The Thesis
After meeting with company management, Arya is convinced that AMD’s positioning in the server processor market gives the stock a major source of upside in coming quarters.
According to Arya, AMD’s EPYC is on track to begin deployment in Q4 and ramp in 2017. AMD could soon pose a serious threat to Intel Corporation INTC 0.22%’s dominant share of the $15 to $20 billion server processor market. Management reiterated the company’s previous near-term goal of reaching 10 percent market share of this massive market, a share that could represent up to $2 billion in sales annually.
AMD wants to eventually return to its prior peak CPU market share of 27 percent. The previous peak came way back in 2006 when AMD’s Operon chips made a huge impact on the market. Last time AMD took a bite out of Intel’s market share, Intel responded by dropping its average sales price by 25 percent. However, Arya said there are several key differences this time around.
Arya said Intel’s Data Center Group “is more significant to INTC in terms of profitability than it was 10 years ago, and hence INTC would be careful cutting price aggressively.” In addition, Arya said…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
