Morgan Stanley beats the table on AMD stocks


With the seemingly endless selection of headwinds plaguing 2022, this year is going like no other in recent times. Just ask investors to Advanced micro-systems (AMD). After making a habit of constantly outperforming the market, AMD shares have been in decline in 2022 (down 43%) – a very irregular event.

Yet, according to Morgan Stanley’s Joseph Moore, despite the macroeconomic uncertainty, now is the time for investors to seize the opportunity after the stock’s decline.

“While the demand picture in all end markets is mixed given the flattening economy, we believe the stock has overcorrected – we are seeing equity gains and an improving mix in their allowing us to cross more than most with double-digit growth next year, and with the stock down more than 48% from its 4Q21 highs, we consider the risks to be largely priced in.” Moore said.

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That’s not to say there aren’t valid concerns about the slowing economy and the implications for AMD’s business — especially on the consumer side, who Moore says are likely the main culprit. low stock price.

And with PC processors, graphics and consoles accounting for 55% of revenue, the analyst expects a “significant correction” in PC over the coming quarters. That said, even with concerns about consumer-related end markets, Moore believes AMD isn’t as exposed as other major competitors.

And in counterpoint, with a data center and Xilinx products now accounting for around 50% of gross margin in dollars, and both offering “strong potential for market share gain”, over the next 2-3 years, Moore thinks that figure could be around 65%-70%. Thus, even if the analyst remains cautious on the general state of semiconductors, AMD’s “server strength” should allow it to continue to show “solid growth at a now reasonable valuation”.

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To that end, Moore resumed hedging AMD stocks with an overweight (i.e. buy) rating and a price target of $103. If this figure is reached, investors are looking at gains of 25% over 12 months. (To see Moore’s track record, Click here)

Among Moore’s colleagues, AMD’s ratings are mixed, although the bulls remain in control; based on 15 buys against 10 takes, the stock claims a moderate buy consensus rating. The average price target is more bullish than Moore allows; at $136.71, the figure represents an increase of about 66% year-on-year. (See AMD stock predictions on TipRanks)

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Disclaimer: Opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.


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