AMD Shares Rise on Wells Fargo Upgrade to Overweight

AMD's traction within high-performance computing is underappreciated, Wells Fargo said in upgrading the stock to overweight.
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Shares of Advanced Micro Devices  (AMD) - Get Report rose Friday, after Wells Fargo analyst Aaron Rakers upgraded the semiconductor maker to overweight from equal weight, lifting his share-price target to $100 from $82.

He’s particularly impressed with AMD’s progress in high-performance computing, MarketWatch reports.

"While AMD's success at hyperscale cloud vendors is the most visible and meaningful volume driver, we think the company's impressive, and we believe somewhat underappreciated, traction within high-performance computing has been an important positive validation of the company's architectural positioning/roadmap execution," Rakers wrote in a commentary.

He sees the opportunity for a more visible data-center graphics-processing-unit strategy "as an additional positive" for AMD.

The company’s shares recently traded at $85.42, up 2.9%. They have soared 86% year to date.

On Wednesday Goldman Sachs upgraded AMD to buy from neutral, adding it to Goldman’s Conviction List. Goldman analysts acted based on AMD’s valuation. The stock had dropped 19% from Sept. 1 to Nov. 2.

The slide “presents a compelling opportunity to participate in what we expect to be a multiyear share gain and margin-expansion story,” the analysts wrote in a commentary cited by Bloomberg.

Goldman’s research points to “strong [personal-computer] fundamentals” through the first half of next year and “design win/share gain momentum [for AMD] in the client and commercial PC space,” Goldman said.

Morningstar analyst Abhinav Davuluri also expressed enthusiasm for AMD, after its earnings report last week and news of its agreement to buy chipmaker Xilinx for $35 billion.

“We are raising our fair value for AMD to $67 per share on a probability-weighted basis,” he wrote in a commentary.