Shares of chipmaker Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report rose Tuesday after analysts at Jefferies published a bullish note, raising its price target to $95 from $86 price target while maintaining its buy rating.
Jefferies analyst Mark Lipacis is optimistic about AMD following rival Intel's (INTC) - Get Intel Corporation (INTC) Report recent announcement that its 7nm yields were 12 months behind schedule and its 7nm CPU launch is six months behind schedule.
"Given our updated view that INTC issues are learning curve related making it hard to close the gap with TSMC, we expect to see AMD's share gains accelerate," Lipacis wrote.
AMD shares rose 6.1% to $82.40 in morning trading Tuesday.
The bull case for AMD is that it captures 30% market share from Intel over the next two to three years, giving it 50% of the overall market in four to five years, wrote Lipacis.
In July, Intel announced that its 7-nanometer processor, a key component in its strategy to take on market-leading rivals such as Taiwan Semiconductor (TSM) - Get Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR Report and AMD, would be delayed.
Less than a week later, the company announced that Chief Engineering Officer Murthy Renduchintala would be stepping down on August 3.
Intel said it expects to post earnings in the third quarter of $1.10 a share on revenue of $18.2 billion. Wall Street had been expecting earnings of $1.14 a share on sales of $17.9 billion.
Jefferies analysts say that a prolonged COVID-19 outbreak could hamper its projected growth trajectory for AMD with greater-than-expected "demand destruction and supply chain constraints."
However, minus that scenario "We think core Gaming will benefit from increased demand for high-end PC cards and mining GPUs for cryptocurrency. We think share gains in high-performance desktop and notebook will be achievable for AMD," Lipacis wrote.