AMD Shares Upgraded on Product Execution

Chipmaker’s new processor strong contender against Intel.

Although trade war fears have hit the tech space, particularly the semiconductors, harder than other sectors, companies in the space are still performing well operationally—and are even getting analyst upgrades.

On Monday, Cowen raised its price target on Advanced Micro Devices (AMD), where it already has an Outperform rating. Cowen raised their price target on shares to $42 from $40.

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  • The firm’s upgrade is based on AMD’s latest server processor, unveiled last week, which looks like it will give it strong competition against Intel. The company’s overall produce suite across PC, GPUs, and servers can improve gross margins and make the company look more attractive.

    Action to take: We like the semiconductor and chipmakers on any short-term, trade-war fear related selloff, as they tend to rally quickly when the fears subside. With AMD shares around $34, we think shares are fine, although they’ve already rallied 73 percent in the past year and trade at 31 times earnings.

    Speculators may want to look at buying an out-of-the-money call option, such as a January 2021 $42 call. That would hit the Cowen price target, but would also provide investors with a triple-digit winner instead of the 23 percent gain in shares—and would likely see a bit move as soon as the latest trade war fears subside.