Please ensure Javascript is enabled for purposes of website accessibility

Why AMD Stock Popped Today

By Rich Smith - Updated Apr 15, 2021 at 4:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two Wall Street heavyweights line up behind AMD.

What happened

Shares of semiconductor stock Advanced Micro Devices (AMD -3.66%) jumped 4.5% by the close of trading on Thursday after a pair of Wall Street banks endorsed the stock with buy ratings.

So what

First in line this morning was Raymond James, which according to initiated coverage of AMD with an outperform rating and a $100 price target. Citing AMD's 15% pullback in share price since the year began, Raymond James said now is the time to "get involved with AMD," which has been hurt both by investor anticipation of a turnaround at archrival Intel (INTC -2.86%), and also by this week's announcement that NVIDIA (NVDA -4.20%) is moving into the business of building CPUs to compete with both AMD and Intel.

Contradicting these theories, the analyst predicts that AMD will retain an advantage in CPUs through at least 2024.

Echoing the sentiment, Bank of America today reiterated its own buy rating and $100 price target on AMD, predicting that AMD's recent underperformance is likely to correct as investors clue in to the edge AMD's Milan chips still hold over Intel's new Ice Lake server CPUs. Additionally, Bank of America reminded investors that Intel's new 7nm products won't be on the market for another couple of years, by which point AMD's lead could be insurmountable.  

Computer chip

Image source: Getty Images.

Now what

Ultimately, Bank of America anticipates that AMD will steal more than 3 full percentage points worth of market share over the next several years, probably mostly from Intel. So while value investors may prefer Intel's 14 P/E ratio over AMD's loftier 38 times earnings valuation, growth investors should know AMD is the semiconductor stock with momentum.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
$73.67 (-3.66%) $-2.80
Intel Corporation Stock Quote
Intel Corporation
$36.34 (-2.86%) $-1.07
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$145.23 (-4.20%) $-6.36

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.