First in line this morning was Raymond James, which according to StreetInsider.com 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 (NASDAQ:INTC), and also by this week's announcement that NVIDIA (NASDAQ:NVDA) 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.
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.