Intel Corporation (NASDAQ: INTC) has outperformed Advanced Micro Devices, Inc. (NASDAQ: AMD) by nearly 30 percent since Sept. 12 on reports that Intel’s 10nm chip delays might not be as bad as feared, but one Wall Street analyst says AMD is still the stock to buy at this point.
Bank of America analyst Vivek Arya reiterated his Buy rating and $35 price target for AMD and his Neutral rating and $56 price target for Intel.
According to Arya, AMD still has a six- to nine-month advantage over Intel with its 7nm server chips.
“In our view, while INTC can slightly improve launch timing for next-gen 10nm-based PC processors (Cannon Lake), the launch of the more critical server parts (Ice Lake) are still unlikely before mid-2020 at-best, given the time constraints of the qualification/production process and quality controls required for mission-critical server parts,” Arya wrote in a Friday note.
AMD also has a potential positive catalyst ahead after announcing that CEO Lisa Su will headline the CES event in January, likely featuring the new 7nm server and GPU chips. Arya says that event could boost investor confidence in the new products.
Arya says AMD and Intel investors should get a good sense of when to expect 10nm server chips from Intel based on when the company gets its 10nm PC CPU products to market. Historically, server part production has lagged PC production by at least nine months, and Arya expects the PC products to hit the market in the second half of 2019.
Arya said any profit-taking in AMD following its upcoming earnings report could be an excellent buying opportunity.
AMD traded around $28.07 per share Friday morning, while Intel traded around $47.57 per share.
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