Goldman's Semiconductor Pair Trade: Buy AMD, Sell Intel

Advanced Micro Devices, Inc. AMD offers a compelling buying opportunity even as rival Intel Corporation INTC remains a Sell, a Goldman Sachs analyst said Wednesday. 

The AMD, Intel Analyst: Analyst Toshiya Hari upgraded AMD from Neutral to Bu, and added the shares to Goldman's Conviction List. The analyst raised the AMD price target from $84 to $96. 

Hari reiterated a Sell rating on Intel shares and reduced the price target from $38 to $46.

Goldman Projects Above-Consensus AMD Earnings Growth: The recent correction that resulted in AMD shares declining about 17% from their September highs presents a compelling opportunity to participate in what could be a multiyear share gain and margin expansion story, Hari said in a note. 

The weakness may have to do with concerns around the sustainability of demand and AMD's proposed acquisition of Xilinx, Inc. XLNX, the analyst said. 

Related Link: Intel Makes Its Second AI Acquisition In A Week

AMD is poised to experience share gains across the PC and CPU markets — and margin expansion, he said.

These factors, along with operating leverage, will likely drive above-consensus earnings growth, Hari said.

Goldman Bearish On Intel: The ongoing concerns surrounding Intel's competitive position in CPUs, which fetch the company around 70% of total revenue, and its margin profile have left Goldman bearish on the company, the analyst said. 

AMD, Intel Price Action: AMD shares were trading 4.97% higher at $80.38 at last check Wednesday, while Intel shares were up 1.65% at $45.59.

Related Link: Why The Best Outcome For Intel Shareholders Is To Break Up The Chipmaker

Photo courtesy of AMD.