Advanced Micro Devices (NASDAQ:AMD) is one of the dominant players in the field of global chip production. It is one of the largest and most highly sought-after chipmakers worldwide. Consequently, analysts are quite bullish on AMD stock right now. So am I.
This view certainly makes sense when investors look at the numbers. Indeed, AMD's Q2 financial report, released in July, indicates more growth may be on the horizon.
However, the question many investors have is how long can the party go on? (See AMD stock charts on TipRanks)
Let's discuss whether now is a great time to consider buying AMD stock.
AMD to Keep Gaining Market Share
AMD’s x86 CPU market share has touched a 14-year high, reaching 22.5%. This comes as Intel (NASDAQ:INTC) appears to be losing ground.
It's perhaps no surprise then that AMD stock has risen approximately 20% over the past year.
A lot of this success is due to the efficiency of AMD’s latest generation of microprocessors. The new EPYC server processors are much more efficient than their Intel counterparts, which is getting noticed by major players.
In June, AMD supplied 59% of the processing cores to new systems in the world's top 500 supercomputers. The company only supplied 46% of them in November 2020.
Additionally, the demand for AMD chips has shot up recently, as more tech giants opt for AMD offerings. Moreover, demand is expected to increase further as over 100 systems powered by third-gen EPYC processors will be produced by Dell (DELL), Lenovo (LNVGF), Cisco (NASDAQ:CSCO), and others.
As of now, AMD's market share is still relatively negligible when compared to Intel. However, given the pace at which the chipmaker is moving, expectations are that AMD will give Intel a run for its money soon. According to Bank of America (NYSE:BAC) analyst Vivek Arya, AMD's server market has the potential to grow to 25% over the next 18 months.
Superb Q2 Results with Increased 2021 Outlook
AMD reported revenue of $3.85 billion in the second quarter of Fiscal Year 2021. This is a 99% jump year-over-year, and a 12% increase quarter-over-quarter.
Additionally, AMD’s non-GAAP earnings in the same period stood at $0.63 per share.
A near-triple-digit top-line growth rate is impressive for any stock. Given the potentially long runway for growth AMD has moving forward, this stock could continue to outperform.
From a balance sheet-stability standpoint, AMD stock also looks strong. The chip manufacturer has a total of $3.79 billion in cash and cash equivalents as of the end of June. The company's debt load pales in comparison, coming in at only $313 million. This signifies AMD is in a very strong position to invest in future growth.
Wall Street's Take
According to TipRanks’ analyst rating consensus, AMD stock is a Moderate Buy. Out of 15 recommendations, there are 11 Buys, three Holds, and one Sell.
The average AMD price target is $114.62. The price targets range from a low of $70, to a high of $150 per share.
Bottom Line on AMD stock
AMD seems to be in great shape right now. The financials are strong, growth potential is excellent, and the company is focused on increasing its market share.
Thus, it's hard to make the argument that now is not a great time to jump into AMD stock.
Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article
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