AMD (AMD) has quietly launched a new entry-level graphics card set to compete with Nvidia (NVDA). Meanwhile, Goldman Sachs analyst Toshiya Hari raised his price target on AMD's shares to $84 as the company's "strong" product roadmap execution has led to meaningful share gains across its product lines.
NEW ENTRY-LEVEL GRAPHICS CARD: Over the weekend, AMD put the Radeon RX 5300 GPU graphics card on its website without any other announcement. The card is a competitor to Nvidia's GeForce GTX 1650 and undercuts it in price, Business Insider's Carmen Reinicke wrote.
TARGET RAISED: Goldman Sachs analyst Toshiya Hari raised his firm's price target on AMD to $84 from $50, while keeping a Neutral rating on the shares. The analyst noted that AMD's "strong" product roadmap execution has led to meaningful share gains across its product lines, adding that ongoing process node migration issues at Intel (INTC) should contribute to further share gains. However, he believes the stock's risk/reward is balanced at current levels, with his new price target representing 7% potential downside from current share levels.
In the client space, AMD continues to execute well on its product roadmap, having introduced multiple generations of new products to-date in 20202, Hari contended. Importantly, the analyst pointed out that AMD’s strong execution has contributed to continued share gains, with the company’s Client CPU share standing at 19.7% in the second quarter of 2020 and 18.6% in the first half of 2020, which he expects to continue as AMD introduces Zen 3 devices in the late 2020/early 2021 timeframe.
AMD’s server CPU business also continues to benefit from the company’s consistent execution on its product roadmap, particularly as Intel continues to struggle with its 10nm introduction, the analyst added. As a result of continued customer adoption, AMD’s server CPU share continues to improve, with the company’s server CPU share standing at 5.8% in the second quarter of 2020 and 5.5% in the first half of 2020, which he expects to continue as AMD introduces Milan devices in the late 2020 timeframe.
Long-term, Hari thinks AMD could generate close to $3.00 in earnings power.
PRICE ACTION: In morning trading shares of AMD are fractionally up at $91.04, while Nvidia's stock has gained over 3% to $553.07.
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