What Stifel Expects From Advanced Micro Devices' Q2

Advanced Micro Devices, Inc. AMD is scheduled to report its fiscal second-quarter earnings in late July, and it shouldbe a positive print due to new product ramps, according to Stifel.

The Analyst

Stifel's Kevin Cassidy maintains a Buy on AMD's stock with a price target lifted from $17 to $21.

The Thesis

AMD is modeled to earn 13 cents per share in Q2 on revenue of $1.725 billion, Cassidy said in a research report. (See the analyst's track record here.) 

Encouragingly, data from IDC suggests traditional PC shipments rose 2.7 percent from a year ago to 62.3 million, which would mark the strongest year-over-year growth in over six years, Cassidy said. AMD likely also took advantage of additional strength in business volume, premium notebooks and gaming PCs, while at the same time graphic card prices moderated, he said. 

AMD said in its prior earnings report that blockchain applications accounted for around 10 percent of total revenue; this figure should fall in the second quarter, the analyst said. This view is supported by Taiwanese TUL Corp., a seller of AMD-based GPU products, which reported a 59-percent quarter-over-quarter revenue decline in Q1, Cassidy said. 

Stifel expects AMD to post below-seasonal gaming console-related revenue growth in Q3. Nevertheless, the company's Epyc server CPU revenue should increase and help boost gross margins in the out-quarter, Cassidy said. 

AMD is likely gaining market share in the PC and server CPU market, and this momentum should sustain throughout 2019, in Stifel's view. 

Price Action

AMD shares were trading higher by 3.14 percent at the time of publication Monday morning.

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