While Advanced Micro Devices (AMD) seemingly made the right decision by focusing on GPU and CPU — as evident by its continued rising market share — the company recently partnered with Samsung to reenter the mobile market. This is big news for the AMD. While the company itself won’t be developing chips for smartphones, it will license its technology to the phone giant, who will pay license and royalty fees. This opens up an entirely new market for AMD, who already in 2019 has made headlines for its new 7nm chip and being contracted to develop the world’s most powerful supercomputer.
Not convinced? Deutsche Bank analyst Ross Seymore isn’t. The analyst maintained a Hold rating on AMD stock, with a $25 price target, which implies nearly 23% downside from current levels.
As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ross Seymore has a yearly average return of 26% and a 79% success rate. Seymore is ranked #30 out of 5,191 analysts.
While the analyst isn’t changing his mind on the stock, he does believe the return to mobile is “clearly a positive for AMD, as it allows the company to address an additional portion of the graphics market TAM (smartphones) in a profitable manner.” Before this partnership, the company “had not addressed this ‘ultramobile’ portion of the graphics market since it sold its mobile GPU IP to QCOM in 2009 (aka Adreno),” but serves as a large and growing market as mobile penetration continues to increase.
In Seymore’s view, not only does this open the door for more revenue, but “this announcement provides an endorsement of AMD’s RDNA architecture (the basis of next-generation Navi GPUs to be released in July).” This is similar to that of the US Government’s decision to contract AMD to develop the world’s most powerful supercomputer — while it won’t be a significant revenue…