Piper Sandler: AMD shares could jump 40%

on May 17, 2022
  • Piper Sandler upgrades AMD to overweight with a price target of $140.
  • Analyst Harsh Kumar defends his bullish call on CNBC's "The Exchange".
  • Shares of the semiconductor company closed nearly 9.0% up on Tuesday.

Shares of Advanced Micro Devices Inc (NASDAQ: AMD) closed nearly 9.0% up on Tuesday after Piper Sandler turned bullish on the multinational semiconductor company.

Harsh Kumar sees upside to $140 in AMD shares

Analyst Harsh Kumar upgraded AMD to “overweight” this morning with a price target of $140 that represents a 40% upside from here. Defending his call on CNBC’s “The Exchange”, he said:

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Our thesis was that PC sales will slow down and Xilinx acquisition wouldn’t be materially impactful. But AMD is navigating those headwinds and Xilinx turned out to be good for it. Plus, the stock’s come down, now trading at a forward multiple of just 20.

Earlier this month, the California-based company reported market-beating results for its fiscal Q1 and raised its full-year guidance. The stock is down more than 30% for the year.

AMD is hedged against macro headwinds

The Piper Sandler analyst agrees that consumer slowdown as the U.S. central bank continues to tighten the monetary policy continue to be a headwind, but says AMD is fairly hedged against both.

AMD made a big pivot towards commercial PCs that are not susceptible to retail slowdown. Secondly, the console business will be a very good grower this year. Server business has always been strong. And Xilinx is a nice cap on the stock.

Harsh Kumar is now bullish on the semiconductor space at large. As of last week, the VanEck Semiconductor ETF has started to recover, now up more than 10% versus the low on May 12th.

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