AMD is a 'high-risk/high-reward' stock, RBC says
- AMD will continue to be a "high-risk/high-reward" stock with a lot of volatility, RBC says.
- The chipmaker had been rallying in recent weeks as rival Intel struggled to produce a 10-nanometer chip.
- On Wednesday, one day after a report said Intel's chip production could ramp up soon than expected, AMD shares tumbled into a bear market before receiving an upgrade at the ratings agency Moody's.
- Watch AMD trade in real time here.
View all Offers
- 17% OFF
Samsung Galaxy M21 2021 Edition (Arctic Blue, 4GB RAM, 64GB Storage) | FHD+ sAMOLED | 6 Months Free Screen Replacement for Prime (SM-M215GLBDINS)₹ 11999₹ 14499Buy On
OnePlus Nord CE 5G (Charcoal Ink, 8GB RAM, 128GB Storage)₹ 24999₹ 24999Buy On
Redmi 9A (Midnight Black, 2GB RAM, 32GB Storage) | 2GHz Octa-Core Helio G25 Processor₹ 6799₹ 8499Buy On
- 20% OFF
iQOO Z5 5G (Mystic Space, 8GB RAM, 128GB Storage) | Snapdragon 778G 5G Processor | 5000mAh Battery | 44W FlashCharge | Rs.1000 Coupon Discount₹ 23990₹ 29990Buy On
- 17% OFF
Redmi Note 10 Lite Aurora Blue 4GB RAM 128GB ROM | Alexa Built-in₹ 14999₹ 15999Buy On
AMD will continue to be a high risk, high reward stock with a lot of volatility, RBC says.
"AMD remains as our high-risk/high-reward name where we believe upside could be $60 and downside to around $15 if the product has issues," RBC analyst Mitch Steves said in a note sent to clients on Wednesday.
"We think the volatility will continue with the stock moving up or down 10% each month until 2019; this likely removes momentum traders and retail investors who take money off the table. "
AMD had been rallying in recent weeks after analysts projected Intel's struggle to produce a 10-nanometer chip would likely benefit it in the server and high-end commercial-desktop market. Intel will undersupply the PC market with chips between the last quarter of 2018 and the second half of 2019 by 15%, Jefferies said.
But on Tuesday, AMD dropped nearly 4% after a research report said rival Intel may cure its production problem sooner than expected.
Tuesday's sell-off spilled over into Wednesday, with AMD shares falling another 8% before bouncing after the ratings agency Moody's upgraded the name, citing growth in its PC segment as well as strength in gaming consoles like the Xbox and the PlayStation. AMD's stock was down 22% from its September high at Wednesday's low.
Moody's also mentioned that, while Intel has struggled to produce a 10-nanometer chip, AMD has sped up sampling 7-nanometer server processors, which in theory provide better performance than 10nm ones. AMD is expected to launch a 7nm datacenter GPU later in 2018, which can help the company increase its share of the profitable and growing server CPU market from its current level of just over 1%, said Moody's.
"We don't expect much heading into the end of the year as we believe Intel will maintain its PC share by shipping 14nm chips into the low-end PC market," Steves said.
"We maintain our recommendation that investors should accumulate the stock on its weakness and continue to do channel checks on PC and Server demand for the 7nm chip in the first quarter of 2019," he added.
AMD shares were up 155% this year through Wednesday.
- Danone CEO: Millennial parents are 'agents of change' that are forcing massive shifts at the $48 billion company
- A senior Goldman Sachs fintech banker was about to join JPMorgan - but then got lured back -and it's another sign of the fierce battle for M&A talent
- A $150 billion investment chief lays out his 4-part recession checklist - and warns we're approaching dangerous territory
Get the latest Intel stock price here.
NOW WATCH: 3 surprising ways humans are still evolving
- Best coffee and tea mugs for your office or home
- WHO may approve Bharat Biotech's Covaxin 'within 24 hours' for emergency use, according to media reports
- Axis Bank posts highest ever quarterly net profit that grew 86% on year
- Pitch your startup ideas at IIT Bombay’s business model competition Eureka! — Here’s how you can apply
- Fino Payments Bank will be the first fintech startup in India to get listed on the bourses and it is profitable