Bank Of America Analyst Says AMD's Stock Presents 'An Enhanced Opportunity'

Advanced Micro Devices, Inc. AMD's fourth quarter earnings report made it clear the stock represents "an enhanced opportunity" for investors, at least according to one of Wall Street's most notable analysts.

The Analyst

Bank of America's Vivek Arya maintains a Buy rating on AMD's stock with an unchanged $18 price target.

The Thesis

AMD's earnings report was highlighted by a 34 percent year-over-year revenue growth to $1.48 billion, which also came in 6 percent ahead of expectations, Arya said in a note. Management's first quarter sales guidance also came in ahead of expectations by 16 percent and signals a "solid start" to 2018. In fact, the company is poised to take share in 2018 and beyond in its enterprise and cloud products where its market share was "virtually zero" last year.

AMD's sales tied to cryptocurrency mining was only 6 to 7 percent of total sales last year at around $300 million, but even excluding this benefit revenue would have grown 17 percent, the analyst said. Even if investors assume that AMD sees the same $300 million sales benefit in 2018, revenue could rise 22 percent in the current year, which would represent a higher growth rate compared to expectations at Intel Corporation INTC's 4 percent growth rate.

Bottom line, while bears will point to AMD's new accounting method, higher operating expenditures, and "misperception" around cryptocurrency mining benefits, the stock presents investors with "an enhanced opportunity," the analyst concluded.