How AMD Can Hit This Analyst's Bull-Case Price Target Of $135

Advanced Micro Devices, Inc. AMD has been a high-flying stock in recent years, and there is more upside ahead, according to an analyst at Jefferies.

The AMD Analyst: Mark Lipacis has a Buy rating and $95 price target for AMD shares, with the bull-case scenario suggesting a price target of $135.

The AMD Thesis: Mercury Research's data showed AMD's total server unit share climbed by 241 basis points year-over-year and 68 basis points from the previous quarter, Lipacis said in a Monday note.

Intel Corporation INTC is one full year behind AMD, as the former plans to ramp its Ice Lake Server CPUs toward the end of 2020, well behind the latter's EPYC 2 Server MPUs on Taiwan Semiconductor Mfg. Co. Ltd. TSM comparable 7nm node, the analyst noted.

AMD's second-gen 7nm EPYC 3 server CPU is likely to ramp by the end of 2020. Lipacis also sees AMD's transistor advantage widening amid Intel's delay in transitioning to 7nm.

AMD's unit share in notebook CPUs climbed 585 basis points year-over-year to 19% and revenue share increased 447 basis points, Lipacis said, citing Mercury Research data.

As the transistor gap between Intel and AMD widens, AMD remains poised for share gains, particularly in the server market.

"As it does, we think that the bull case for AMD, which is based largely on AMD capturing 30% share from INTC over the next 2-to-3 years, will morph to a 50% market share bull case 4-to-5 years out," Lipacis wrote in the note.

AMD Price Action: AMD shares were slipping 3.2% to $82.07.

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