Up more than 155% in 2019, Applied Micro Devices (NASDAQ:AMD) is likely to see higher highs. For those keeping score at home, last year’s increase was almost triple that of the Invesco Dynamic Semiconductors ETF (NYSEArca:PSI), which lists AMD stock as the biggest holding in its chip stock portfolio.
The last time I weighed in on AMD stock, it traded at just $28.80. It’s now up to $48 a share. All thanks to heavier demand, and on news its chips are still “chipping” away at Intel’s (NASDAQ:INTC) lead in the computer chip market.
From here, I believe AMD stock could run 50% higher in 2020.
Analysts are Falling in Love With AMD All Over Again
Just before Thanksgiving, Cowen analyst Matthew Ramsay reiterated an outperform rating on the stock. “We believe AMD’s consistent track record of execution under her leadership, and stable roadmap, is increasingly resonating with customers and investors,” he noted.
Wells Fargo’s Aaron Rakers increased his price target on AMD to $48 from $40. RBC Capital Markets’ Mitch Steves raised his target to $50, too predicting demand for AMD server chips will continue to improve.
Then, late last week, Mizuho analyst Vijay Rakesh said he’s bullish on AMD stock again, boosting his price target to $55 a share from $38. He believes the 2020 server market could be “stronger than muted consensus,” as prices stabilize “as most of the aggressive price cuts by AMD’s chip rival Intel are now in the past.”
Instinet analyst David Wong also reiterated a buy rating on the stock, boosting his price target 45% to $58 on expectations the company will continue to strengthen its position in the new year.
AMD Continues to Chip Away at Intel Market Share
Throughout 2019, AMD’s 7-nanometer Ryzen seriously challenged Intel’s (NASDAQ:INTC) market position, as I noted in late November 2019.
At the end of the third quarter, AMD had an 18% share of the desktop chip market, up from 17.1% at the end of Q2, and 5% in Q2 of 2018. In Q3, its market share in mobile processors jumped 3.8 percentage points YoY to 14.7%, according to TechRadar.
Things could get even hotter for AMD after announcing its third generation Ryzen 4000 mobile processors for laptops, which, according to CEO Lisa Su. outperforms Intel’s i7 rival. Better, AMD is claiming “superior performance” against NVIDIA (NASDAQ:NVDA) in gaming.
AMD’s new high-performance desktop processor, Threadripper reportedly doubles the number of cores to 64, which Su has said has not been available before. According to TechRadar contributor, Bill Thomas, AMD gave Intel a “proper thrashing” with new product offerings.
The other big catalyst for AMD is the new gaming consoles from Microsoft (NASDAQ:MSFT) and Sony Corporation (NYSE:SNE) later this year. Both consoles will use AMD chips — offering a substantial catalyst, near-term.
Bottom Line on AMD Stock
With plenty of growth in store for 2020, there’s plenty to like about AMD stock. The company continues to chip away at Intel’s market share with new, heavily demanded chips. Plus, with new gaming consoles coming later this year, AMD chips will again be under sizable demand. By this year, I strongly believe Advanced Micro Devices stock could rally another 50% higher.
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
