AMD share price bounces back after analyst claims 7nm won’t be a “game changer”

An industry analyst from New Street Research is claiming AMD's stock price is not sustainable and is predicting a major 30% downturn which will see the red team's stock dropping to $18. It is looking a little like a self-fulfilling prophecy right now as the share price dropped 11% since Friday, when Pierre Ferragu sent out his note to investors. But the city does have a tendency to overreact and AMD's price is already bouncing back. "AMD's stock price reflects a scenario we don't believe possible," says Ferragu, suggesting that after AMD's meteoric rise over the last couple of years - where its stock has shot up over 150% in the last six months alone - it's going to go through some sort of correction. Not only that but its main rivals, Intel, will "easily" be able to bring out competing parts that prove superior to the 7nm chips set to come next year. "AMD is in a tough position, competing with Intel, who can spend an order of magnitude more on R&D," says Ferragu. "Intel can easily bring to market an architecture similar to AMD's, with better performance... We expect signs of slowdown or indications of a competitive response by Intel to materialise by the end of 2019."

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