2 AMD Analysts Turn Bullish: 'This Has Historically Been A Very Strong Buy Signal'

Key cycle indicators are shifting and channel checks now show that Advanced Micro Devices Inc AMD is positioned to take share in 2023, according to a pair of analyst firms that upgraded the semiconductor stock.

What Happened: UBS on Monday upgraded AMD from Neutral to Buy and raised the price target from $75 to $95 after identifying a shift in a few key cycle indicators.

The analyst firm highlighted its inventory momentum analysis, which suggests that AMD could start to trend higher from current levels. 

"We compare aggregate inventory growth at chip companies to overall semiconductor revenue growth expectations on a 1Q lagged basis. When inventory growth peaks relative to revenue growth, this has historically been a very strong buy signal and based on earnings reports & guidance over the past few weeks, we are there," UBS wrote in a note to clients.

Stocks tend to bottom when estimates are cut by more than 60% for at least six months in a row. November will mark the sixth month that such has been the case, suggesting a bottom could be in, the firm explained. 

Following a series of supply chain checks, Baird analysts are also turning more positive on AMD, upgrading the stock from Neutral to Outperform and raising the price target from $65 to $100.

The company's new Genoa chip release is expected to translate into an acceleration in market share gains in 2023. 

"AMD is solidifying its position with a clearly-defined, performance-leading and delivery-proven product roadmap to OEMs for the next several years, representing a critical key ingredient for market share gains," Baird wrote in a note to clients. 

"Significantly-raised capacity in past few months will support Genoa's high-volume ramp throughout 2023."

Both firms expect AMD to outperform in 2023. Monday's price target changes suggest the stock could rally more than 30% from current levels. 

See Also: Tesla, Apple, Amazon, Nio, AMD: China Car Crash, MR Updates And Earnings Draw Investors' Attention

AMD Price Action: AMD has a 52-week high of $164.46 and a 52-week low of $54.57.

The stock was up 3.12% at $74.61 at time of publication, according to Benzinga Pro.

Photo: courtesy of AMD.