AMD More Attractive Than Intel’s Contradictory Conundrum,’ Says Canaccord

The good times keep rolling for Advanced Micro Devices ( #AMD ), whereas for #Intel (INTC) and #Nvidia (NVDA), things are looking tougher, according to three notes today from Canaccord Genuity’s Matthew Ramsay. Ramsay, who has a Buy rating on AMD shares, and Nvidia, and a Hold on Intel, writes that the former will take share in microprocessor and GPU chips, while Intel will struggle to find new growth and Nvidia’s sales of GPUs face challenges.

Reiterating his $17 price target on AMD, Ramsay notes the stock appreciation but advises investors to stay the course as it takes share in PCs, servers, and GPU compute.

He notes recent improvements to the company’s “Ryzen 7” chips, after some people quibbled with its single-threaded performance in PCs:

While we viewed initial 8-core productivity and memory-intensive benchmark results as very positive for first-generation Ryzen 7 CPUs at launch versus often higher-priced Intel CPUs, reviewers made fair criticism of AMD’s mid-tier 1080p gaming benchmark performance that fell well short of Intel’s levels. In recent weeks, AMD software engineers have worked closely with partners to generate meaningful performance improvements from software and Windows scheduler changes to support Zen’s architecture, yielding 30% performance improvement in many cases. While we certainly would never expect AMD’s new Zen architecture to match Intel across all benchmarks, we believe early performance and particularly performance/watt benchmarking of Ryzen 7 CPUs in concert with more mature software optimizations should position the company well for solid desktop sales in 2017 (so far limited by only motherboard supply) and provides an encouraging proxy for Naples server potential starting in 2H/17 ramping into 2018.

Intel, Ramsay believes, is “A riddle, wrapped in a mystery, inside an enigma,” and its stock and its strategy “remain a contradictory conundrum.”

The company could just milk its cash flows, but instead its “investing for growth,” he observes.

http://www.barrons.com/articles/BL-TB-54559