AMD is set to to be the big winner from Intel's stumbles, Morgan Stanley says

  • Intel is struggling to produce the next generation of computer chips.
  • AMD could pick up the slack as Intel lags in producing 10-nanometre chips, Morgan Stanley says.
  • The bank increased its price target for AMD from $US8 to $US11.
  • Follow AMD’s stock price in real-time here.

When it comes to making computer chips, size is everything.

As chipmakers race to produce chips using the next generation technology 10-nanometre node, Intel has stumbled. And now that its chips – originally expected in 2017 – aren’t expected in mass quantities until the end of this year, there’s room for AMD to pick up some market share, Morgan Stanley said Wednesday.

“While we expect Intel to continue to crank out performance gains on 14 nm while they wait for 10 nm to become more commercial, the process node advantage may have swung from Intel to AMD,a strong and surprising statement,” analyst Joseph Moore wrote in a note to clients raising his AMD price target to $US11 from $US8.

The increase brings Morgan Stanley’s price target closer to Wall Street’s average of $US15, but the bank still rates AMD as “underweight.” Its price target is 33% below where shares were trading Wednesday.

“The upside in servers, a business that should see substantial benefit from Intel’s manufacturing challenges, needs to be balanced against the potential risk in graphics, a larger business which has grown nearly 100% y/y, facing the risk of an NVIDIA product launch and sharp declines in crypto,” Moore said.

Shares of AMD have risen 50% since the beginning of 2018, easily outpacing the benchmark S&P 500 index.

“AMD’s future looks brighter than it has in over a decade, but it remains a portfolio of businesses, some growing and some with challenges,” said Moore.

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