Shares of Advanced Micro Devices Inc. (NASDAQ: AMD) were taking a ride lower, along with the broader equity indexes and other key semiconductor names, after a weaker outlook was offered by Taiwan Semiconductor. It also coincides with AMD’s launch of the second generation Ryzen desktop processors. These updates are built using the 12nm process technology and are optimized for gaming, streaming and creators. And for a further bit of pressure, AMD has seen one analyst maintain a negative view of the company with a lower target price. Still, things might actually be better than they look in the larger picture.
It may seem unfair, but much of the negativity on AMD might not even be tied to AMD itself on a day where the Dow Jones industrials, S&P 500 and Nasdaq Composite were all lower and close to their respective 50-day moving averages. AMD was also down less than the overall chip sector, with the PHLX Semiconductor Index down almost 4.5% on the same day.
An email from a local technology and PC store indicated that the second generation processors are available, and the prices for the Ryzen chips were far higher a year ago. The newer chips are said to be targeted after addressing complaints from gamers to optimize performance.
The newer, second-generation Ryzen processors were said to be able to offer up to 15% higher gaming performance than 1st-gen Ryzen processors, according to AMD’s launch statement.
Barclays met the second generation of Ryzen chips with a negative analyst rating. The firm maintained its Underweight rating on AMD and trimmed its price target to $9 from $10. The Barclays call came from Blayne Curtis, who expects March to be ahead of strong GPU demand and channel fill but sees the June quarter only coming closer to in line as crypto/mining tailwinds continue to show signs of slowing. Just a day earlier, MKM Partners maintained its Hold rating on AMD, but the firm has a $13.50 price target.
According to Thomson Reuters, the current consensus analyst price target (mean) of $13.97 has come down from $14.64 just 30 days ago, and the service shows that AMD has 12 Buy or Outperform ratings, 11 Hold or Neutral ratings and six Sell or Underperform ratings. The Thomson Reuters median price target is actually lower at $13.00.
Back on February 23, 2017, 24/7 Wall St. pointed out that the preorders were just beginning for a March 2, 2017, launch. The three tiers of this processor were listed, and in terms of the stats, their breakdown was as follows:
- Model 1800X: Base clock 3.6 gigahertz (GHz) with a suggested price of $499
- Model 1700X: Base clock 3.4 GHz with a suggested price of $399
- Model 1700: Base clock 3.0 GHz with a suggested price of $329
Now the second generation of AMD’s Ryzen chips is launching, all with a Wraith Stealth cooler, and the prices for what was launched today were listed as follows:
- Ryzen 5 2600 for $199.00
- Ryzen 5 2600X for $229.99
- Ryzen 7 2700 at $299.99
Shares of AMD were last seen down almost 3% at $10.06 on Thursday in late-afternoon trading. AMD had a consensus analyst price target of roughly $14.00, and its 52-week trading range is $9.04 to $15.65. Despite having traded up to as high as $13.05 in late January, AMD’s stock closed out 2017 at $10.28, for a year-to-date drop of barely 2%.
AMD’s Jim Anderson was quoted in the launch article. He is senior vice president and general manager of AMD’s Computing and Graphics Business Group. The launch statement said:
Last year we started changing the PC industry with the introduction of our first wave of Ryzen processors – delivering more performance, features, and choice to our customers than before. Our 2nd Gen Ryzen CPUs continue this pursuit by raising the standards for enthusiast gamers and creators. With this launch we’re also demonstrating that we are just getting started, that we are committed to delivering a multi-generational roadmap of leadership high-performance processors that will drive innovation and competition into the industry for years to come.