AMD: Growth Is Already Priced Into the Stock, Says Analyst

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Over the last few years, Advanced Micro Devices (AMD) stock has proven itself a winner time and again. Investors have cheered the chipmaker on as it has incrementally cut into its bigger rivals’ market share. As the company began closing the gap, the Street offered its reward; For two consecutive years – 2018 and 2019 – it was the S&P 500’s best performing stock.

AMD has since kept on delivering the goods, and the company didn’t disappoint when it reported Q420 results on Tuesday.

AMD crossed the $3 billion sales threshold for the first time, bringing in quarterly revenue of $3.24 billion, amounting to a 52% year-over-year uptick and beating the estimates by $210 million. In the process, the company delivered a full-year sales record of $9.76 billion. There was a beat on the bottom-line, too, with Q4 Non-GAAP EPS of $0.52 coming in ahead of the Street’s call by $0.04.

There was growth across the board, but a special mention should go to server revenue which more than doubled year-over-year, to reach a high teens percentage of overall company sales.

Looking ahead, there was more good news. The company guided for 2021 revenue growth of 37% year-over-year, way above the Street’s forecast for a 28% increase.

However, all of that big growth is already priced in, according to Benchmark analyst Ruben Roy.

“AMD continued to execute on its product roadmap with more than 20 unique 7nm PC, gaming and data center products ramped into volume production during the year,” the 5-star analyst said. “While we continue to expect AMD’s product and technology momentum to translate into further market share gains in the PC and server markets, we believe that the share price reflects Company execution.”

Accordingly, Roy rates AMD shares a Hold, without suggesting a price target. (To watch Roy’s track record, click here)

What does the rest of the analyst fraternity think? All in all, the Street maintains a positive stance on the chip giant. Based on 16 Buys, 6 Holds, and a single Sell, AMD stock has a Moderate Buy consensus rating. The average price target stands at $107.52, implying upside of ~26% over the next 12 months. (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.

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