Is AMD a Buy Following New Product Announcements? Wells Fargo Weighs In
On Tuesday, Advanced Micro Devices (AMD) made a slew of new product announcements at its 2022 Product Premiere live affair which took place in conjunction with the CES 2022 tech event.
As per expectations, the company unveiled the next-gen 6nm Zen3+ based Ryzen 6000-series mobile APUs – codenamed Rembrandt – which boasts integrated RDNA2 graphics and a broadened discrete gaming GPU line-up with RDNA2-based Radeon GPUs. These chips are based on a new Zen 3+ CPU architecture and manufacturing technique, but more importantly, their integrated graphics processors replace the aging Vega architecture with the latest RDNA2 architecture used in Radeon 6000-series graphics cards. These are also used in the modern Xbox and PlayStation consoles, and the forthcoming Steam Deck.
In what amounts to more than a 30% year-over-year increase, the chip giant announced that 2022 will kick off with a record of 200+ premium ultra-thin/light, gaming, and professional notebook designs to be sent out with the new Ryzen 6000-series APUs. The first notebooks will ship in February. Notable clients include Lenovo, Dell, Acer, Asus, HP, and others.
“We think investors could consider AMD’s updated traction in notebook CPU design wins as one of the most notable incremental data points from the announcements,” said Wells Fargo’s Aaron Rakers.
For comparison’s sake, at CES in 2020 and 2021, the company announced 150 and 100 premium notebook design wins, respectively.
AMD’s mobile CPU market share is also on the rise. Going by Mercury Research estimates, share increased from ~20% in 3Q21 to ~22% in 3Q21.
On top of the share trends, Rakers also points to the “estimated expansion in AMD’s blended mobile APU ASP ($/unit) trend over the past several quarters,” which validates the company’s pivot into “richer configurations.” For instance, Steam data shows that AMD’s share in the gaming PC market has increased from 26.5% a year ago to almost 32% in November 21.
Bottom line, while Rakers admits AMD shares “are not cheap,” he thinks the stock is deserving of a “premium multiple.” As such, the 5-star analyst sticks with an Overweight (i.e. Buy) rating and $180 price target, implying shares will gain 36% over the next year. (To watch Rakers’ track record, click here)
Overall, AMD gets a Moderate Buy rating from the analyst consensus, based on 23 reviews that include 14 Buys and 9 Holds. The shares are selling for $132.23, and their $141.15 average price target suggests an upside potential of ~8% from that level. (See AMD stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.