Don’t count out Advanced Micro Devices (NASDAQ:AMD) just yet. After AMD stock plunged on concerns the novel coronavirus could damage global chip demands, and lead to supply disruptions, a good deal of that fear is priced into the stock. But once the coronavirus dies off, I expect for chip demand to come back strong.
Analysts are just as bullish with Piper Jaffray’s Harsh Kumar upgrading the stock to “Overweight” from “Neutral” with a new price target of $56. Kumar believes the pullback –triggered by concerns over the coronavirus — “provides an attractive opportunity for long-term investors.”
Cowen analyst Matthew Ramsay also reiterated his “Outperform” rating with a $60 target. Even Northland Securities analyst Gus Richard has a new price target of $52.50, noting, “AMD has become a quality semiconductor franchise.”
With plenty of catalysts ahead, I still have a $70 price target on AMD stock for 2020.
AMD Has Plenty of Catalysts Ahead
It’s tough to argue against Advanced Micro Devices. Here are four key reasons:
- It’s the best performing stock on the S&P 500 for the last two years, as it continues to set the bar higher and higher, and it chips away at market share. It’s also committed to a five-year compound growth rate of 20% revenue growth, and 50% growth in gross margins, as noted by Forbes’ contributor Patrick Moorhead.
- New gaming consoles from Microsoft (NASDAQ:MSFT) and Sony Corporation (NYSE:SNE) due to be launched this year use AMD chips. That alone offers AMD stock a powerful catalyst.
- Intel (NASDAQ:INTC) challenges have allowed AMD to capture market share. According to Hans Mosesmann, managing director at Rosenblatt Securities, “(Intel’s) lack of execution and AMD’s flawless execution has yet to play out in terms of the market share AMD is going to gain in the coming years … I wouldn’t be surprised if they captured half the data center market.”
- The coronavirus could be a catalyst, “as more people stock up on powerful laptops and gaming systems powered by AMD technology for work and entertainment at home,” Kevin Krewell, principal analyst at Tirias Research said.
It also just announced its CPU and graphics processing units will power the world’s fastest supercomputer. In fact, it, Hewlett Packard (NYSE:HPE) and the Lawrence Livermore National Laboratory will work on the El Capitan supercomputer for the U.S. Department of Energy. Importantly, it beat out Nvidia (NASDAQ:NVDA) and Intel for this deal.
The Bottom Line on AMD Stock
Despite insane volatility, Advanced Micro Devices is a long-term buy and hold. I still strongly believe it can hit $70 a share this year. With sizable catalysts in front of it, that shouldn’t be a problem at all. In my opinion, AMD stock is a strong buy.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, he did not hold a position in any of the aforementioned securities.
