has dominated the artificial-intelligence-chip market so far, and Advanced Micro Devices and Intel are left in its wake. Things could change for the better for AMD, but the chances are less good for Intel, according to an analyst at Melius Research.
“We met with AMD this week—and think it could be one of the beneficiaries of a catch-up trade coming out of [the second quarter],” wrote Melius analyst Ben Reitzes in a research note.
Reitzes pointed to a couple of factors which should benefit
AMD
,
including that
had endorsed the benefits of its AI chips on a total cost of ownership basis—the cost when taking into account indirect factors such as power and cooling demands—an area
has promoted as its own strength.
Other potential pluses for AMD could include more orders from
becoming evident in the second half of 2024, and its strength in new AI processors for PCs.
Reitzes has a Buy rating on AMD stock and a $210 target price. Shares were up 0.9% at $168.26 in early trading Friday.
Reitzes has Buy ratings on both Nvidia and AMD stock. However, his target price for Nvidia stock of $1,250 implies a potential rise of around 5% from current levels, while his target price for AMD stock indicates a possible gain of 25%.
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However, it’s a different story when it comes to
Intel
.
The semiconductor company’s plan to make a huge investment in chip-manufacturing capacity muddies the waters for the stock, according to the Melius analyst.
“Not only is the Intel foundry story too complicated for the average investor—but the fact you could just buy Nvidia and AMD—companies with AI narratives and very little capital intensity—just adds to the pain,” wrote Reitzes.
Intel now primarily needs to demonstrate that its gross margins have bottomed, and that it can benefit from an uptick in the PCs and servers markets, rather than proving AI chip success, according to Reitzes.
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Write to Adam Clark at adam.clark@barrons.com
