Advanced Micro Devices Inc. is shaping up to be the juggernaut of 2018, as shares surged to close at highs not seen in more than a decade Tuesday after Wall Street’s most bullish analyst on the stock gained some company.
AMD AMD, +1.39% shares rallied to close up more than 11% at $28.06, near their intraday high of $28.11, their highest close since June 6, 2006, when they finished at $28.95. Tuesday was the best one-day percentage gain for the stock since May 16, 2017, when AMD announced its Epyc and Radeon chip lines to take on Intel Corp. INTC, -0.97% and Nvidia Corp. NVDA, +1.08%
More than 190 million shares traded hands Tuesday, making the stock the most heavily traded on the S&P 500 index SPX, -0.17% at nearly four times the volume of the next most heavily traded stock on the index.
Shares surged after two analysts, Mark Lipacis from Jefferies and Matthew Ramsay at Cowen, both hiked their price targets on AMD to $30 after meeting with AMD executives.
Ramsay, who has an outperform rating on the stock, said Intel’s problems this year have largely benefitted AMD — namely, Intel’s delayed rollout of chips and processor security issues that appear to have largely affected Intel chips. Intel shares finished down 1%, and are up 3.9% on the year.
Lipacis, who has a buy on AMD, said he believes the company will ship server chips with a higher transistor density than Intel’s “for the first time in recent history, if not ever.”
“For most of the past 12 years, Intel has executed near flawlessly, as AMD often stumbled and lost share,” Lipacis said in a note. “Intel’s manufacturing lead led to smaller, cheaper, lower power and higher performance transistors — making it nearly impossible for AMD to reverse its share loss.”
“However, over the past four years, AMD’s (and its foundry partner TSMC’s) execution has been, in our view, near-flawless, as Intel’s historical two-year transistor improvement cadence doubled,” he said.
AMD’s 7-nanometer server chips are expected to ship in 2019 and by then Intel’s most advanced chip will be based on 14-nanometer manufacturing technology, which Lipacis said he considers to be a full generation behind the 7-nanometer tech. Lipacis has an underperform rating on Intel.
In late August, AMD shares rallied to their highest levels in a decade after Rosenblatt Securities analyst Hans Mosesmann, then Wall Street’s most bullish analyst on the stock, hiked his price target to a Street-high $30 from $27, following two days of meetings with AMD execs, after which the average analyst price target was $17.38. The next highest price target on the stock is $29, according to FactSet.
Now, of the 30 analysts who cover AMD, 13 have buy or overweight ratings, 13 have hold ratings, and four have sell ratings, with an average target price of $18.64, according to FactSet.
AMD has produced profits in each of the past four quarters, after reporting losses in 12 of the previous 14 quarters, and recently reported its highest quarterly revenue since 2008.
Over the past 10 days, AMD shares have had an average daily volume of 131.1 million shares, also the highest average on the S&P 500. Over the past 52 weeks, AMD shares have traded at an average daily volume of 62.7 million shares, the third-highest average volume on the S&P 500 behind General Electric Co. GE, -2.09% and Bank of America Corp. BAC, +0.68% , according to FactSet data.
AMD shares are also 2018’s best performing stock on the S&P 500 with a year-to-date gain of 173%, crushing short-sellers in the process following record high short positions as recently as April. Compared with AMD’s stellar run for the year, the S&P 500 has gained 8.3%, the tech-heavy Nasdaq Composite Index COMP, -0.23% has grown 17.2% and the PHLX Semiconductor Index SOX, +0.69% has seen a 12.6% rise.
