Cowen Doubles Down On Bullish AMD Stance After Meeting With CTO

Cowen hosted Advanced Micro Devices, Inc. (NASDAQ: AMD) Chief Technology Officer Mark Papermaster at its technology, media and telecom conference, and the executive "conveyed a positive tone" on AMD's 7nm product designs.

The Analyst

Cowen's Matthew Ramsay maintains an Outperform rating on AMD with an unchanged $18 price target.

The Thesis

Ramsay's takeaways after the conversation with the CTO included the following: 

• AMD has successfully completed three separate 7nm product designs, which are believed to be a Rome server, Vega graphics and third-generation Ryzen.
• AMD's 40-percent-plus gross margin target is a "milestone" and not an ultimate objective as the company ramps higher performance CPUs and GPUs.
• AMD has an opportunity to gain market share with server, notebook and desktop products.
• AMD is becoming "more competitive on more equal foundry footing."
• AMD could have a one-year head start to market against Intel Corporation (NASDAQ: INTC), as it could begin sampling 7nm data center CPUs in the bottom half of 2018 versus Intel's 2019 10nm PC timing.
• AMD's server sales should ramp in the bottom half of 2018 from the first-generation EPYC platform and the "impressive roster" of cloud and OEM engagements.
• Expectations for AMD to drive "meaningful" revenue growth as early as the bottom half of 2018 imply the company is likely to see material upside to its 75-cent-per-share EPS target by 2020.

Price Action

AMD shares were trading higher by 3.72 percent at the time of publication Friday. 

Related Links:

Cowen Names 4 Top Semi Picks: AMD, Ambarella, Broadcom, Monolithic Power

5 Reasons Susquehanna Is No Longer Bearish On AMD