Despite downgrading Advanced Micro Devices, Inc. (NASDAQ: AMD) to Negative in March, Susquehanna has reversed course with an upgrade, saying “A lot can change in two months.”
Although not quite a bull yet, Susquehanna’s Christopher Rolland issued a note upgrading AMD shares from Negative to Neutral with a price target raised from $8 to $11.
March’s downgrade was in response to what Rolland saw as more than 20 percent of first-quarter revenue stemming from weakening Ethereum-related GPU prospects.
Since then, a number of factors including ones pertaining to Ethereum have changed the analyst’s view of the company.
- Bitmain’s new Ethereum ASIC chips, which had previously been concerning to Rolland, have had their value proposition “destroyed” by recent price hikes. The ASIC’s new $2,150 price tag has slashed its price-to-performance ratio by two-thirds, clearing some of the way for AMD.
- Ethereum prices have roughly doubled since bottoming on April 6. This has driven a slight reacceleration in GPU purchases for mining.
- AMD reported better-than-expected first-quarter earnings. EPS and sales came in at 11 cents and $1.65 billion, respectively, both beating consensus estimates. These results were driven in noticeable part by non-cryptocurrency mining products.
- Wall Street has considerably cut back its estimates for Q3, bringing them below seasonality and de-risking some crypto headwinds.
- Most importantly, Intel Corporation (NASDAQ: INTC) announced it would push out volume production of its 10nm processors into 2019. This presents AMD the chance to compete at a similar process technology “for the first time in decades,” Rolland said. AMD is expects to sample its 7nm Zen 2 processors by the end of the year.
Shares of AMD opened Wednesday up 1.9 percent, and were trading higher by more than 3.5 percent to $12.89 at time of publication.
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