Could AMD Still Rise 50%?

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Advanced Micro Devices Inc. (NYSE: AMD) has been a very challenged company for years. The company has made some progress in video and graphics processors, but the effort so far in personal computers (PCs) has been slow enough that you might wonder if Intel Corp. (NASDAQ: INTC) has been slowing down its own PC processor lead just to avoid being accused of being a true monopoly.

The biggest question is what lies ahead for AMD. Just this week 24/7 Wall St. wondered whether AMD could conceivably go to zero. While that was not meant as any immediate death sentence, we always try to show both sides of the coin when it comes to controversial companies.

According to Wells Fargo’s David Wong, AMD is still rated as Outperform. Wong also has a valuation range of $3.00 to $3.50. If Wong’s upper-end of that valuation range comes about, AMD could be worth 50% higher than the $2.30 current share price. Wong has many caveats and concerns, but the effort is again to show both sides of the coin.

The note showed that AMD’s chips have twice the battery life of its previous line of processors, along with other upsell claims. The note also said:

AMD claims that the chips boast twice the battery life of its previous line of Kaveri processors, provide the world’s first High Efficiency Video Coding (HEVC) hardware decode support for notebooks, are AMD’s first Heterogeneous Systems Architecture (HSA) 1.0 compliant design, and represent the first ARM TrustZone capable high-performance APUs.

Like Intel, AMD has suffered from the continued decline in PC shipments. However, Intel’s considerably larger size gives it a pricing edge and has allowed it to weather this tough environment much better than AMD, which has struggled to turn a profit for the past few years. In fact, its net income has not been in the black since 2011. This is reflected in its stock price, which is down more than 42% over the past year and is hovering near the all-time low of $2.14.

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