AMD shares could get a boost from 'accelerating market share gains': analyst

AMD may be in position to gain market share in the competitive chip space.

Baird analyst Tristan Guerra upgraded AMD shares to Outperform in a new note. Gerra sees the stock jumping 35% to $100. Shares rose 2% in premarket trading to near $74.

Gerra believes AMD’s new Genoa chips released last week will further widen its competitive moat.

“Supply chain audits highlight the strong adoption of Genoa (5nm Zen 4) among data center OEMs, which are shifting significant resources to support AMD,” Gerra wrote. “Genoa’s very significant performance increase should translate into accelerating market share gains for AMD in 2023, along with significantly higher prices and a higher gross margin profile, cementing AMD’s EPYC leadership for years forward.’

AMD could use a profit after PC slowdowns and data center cooling weighed on its once-booming business in the third quarter amid a bigger slowdown in the chip space. The company was forced to take a $160 million charge for inventory and price adjustments in its graphics and client businesses.

AMD Ryzen Threadripper 3970X processor taken on December 5, 2019. (Photo by Olly Curtis/Future Publishing via Getty Images)

AMD Ryzen Threadripper 3970X processor taken on December 5, 2019. (Photo by Olly Curtis/Future Publishing via Getty Images)

For the fourth quarter, AMD reported sales growth of 14% year-on-year – a slowing pace from the 29% growth achieved in the third quarter – as customers used the backdrop of a moderate economy to manage costs.

“I think what’s happening is: Enterprise is weak,” AMD CEO Lisa Su told analysts on an earnings call. “I think it’s generally people — businesses are just more cautious. China is weak and has been weak all year. And then in the cloud, in general, there is no general.”

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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