Thursday, July 11, 2013

Why AMD Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Advanced Micro Devices (NYSE: AMD  ) have skyrocketed today by as much as 12% following a number of analyst upgrades.

So what: Merrill Lynch and Canaccord Genuity both boosted their respective ratings on AMD to "buy." Merrill more than doubled its price target from $2.50 to $6, and Canaccord did likewise by raising its valuation from $3 to $5. Both analysts are optimistic about the opportunity in next-generation game consoles.

Now what: With Microsoft's Xbox One and Sony's PlayStation 4 both using AMD chips, the next-generation consoles could help bring AMD back into the black, according to Merrill analyst Vivek Arya. There could be pent-up demand that could fend off competition from casual mobile platforms. Console generations last numerous years, so AMD's win could yield many years of recurring revenues.

Interested in more info on Advanced Micro Devices? Add it to your watchlist by clicking here.

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