AMD Loses A Bull: Mizuho Points To Valuation, Limited Upside In Downgrade

Advanced Micro Devices, Inc. AMD shares are up about 82% year-to-date, with the stock hitting a 52-week high of $34.86 on Tuesday.

The Analyst

Mizuho Securities analyst Vijay Rakesh downgraded AMD from Buy to Neutral and increased the price target from $33 to $37.

The Thesis

Notwithstanding a solid Ryzen/Rome portfolio and new product ramps, AMD's 80%-plus year-to-date run and the scope for limited upside potential in the second half led to Thursday's downgrade, Rakesh said in a note. (See his track record here.)

Significantly strong PC shipment trends in the June quarter reflect a pull-in from the September quarter ahead of tariff concerns., the analyst said.

This — in addition to the seasonally flattish December quarter — presents less opportunity for top-line upside in the second half, he said.

Despite AMD starting 7nm production Rome shipments in June, Rakesh said he believes server ramps with hyperscale OEMs heading into the third quarter are still slow.

"We believe AMD SepQ/DecQ Server share gains and associated GM upside could be limited ahead of volume ramps and 1H20 INTC 10nm ramp versus prior expectations."

Mizuho raised its June quarter revenue and EPS estimates above the consensus, while trimming the September quarter guidance.

"We would revisit at a more attractive entry point as we believe L-T 7nm Server/DT roadmap still intact."