Chip stocks have been on a tear this year, and the top winner among them could keep heading higher.
That’s according to two experts who say Advanced Micro Devices (NASDAQ: AMD)—up 113.49% year-to-date as of this writing—could be about to head higher after some possible short-term weakness.
“This stock is ahead of itself, it’s short-term overbought,” said Craig Johnson, chief market technician at Piper Jaffray. “It’s starting to fade in here a little bit. I see good support coming in at about $35. I think that’s going to be the spot where you want to be buying the stock.”
“When I look at the size of the setup that this stock broke out of through, this is the pullback you buy because I think over the next nine to 12 months, this is probably a $50 stock. I’m a buyer of the pullback here,” Johnson said.
To get to the $35 level, AMD would need to fall around 11%. From there, Johnson’s $50 target would see AMD shares 43% higher.
BK asset Management’s Boris Schlossberg is also a big fan of AMD.
“I’ve been a huge bull of AMD…for a long time. Actually the stock is up 22 times since its lows, it’s an amazing performer and it’s been tremendous execution by the executive team there, and they’re definitely eating Intel’s lunch,” Schlossberg said.
Schlossberg does, however, agree with Johnson that the stock could see a slight pullback before heading higher, though he does have a strategy to protect against any possible downside.
“If you have lots of profit built in, it’s probably wise now to do a call substitution strategy where you just simply get a long-term call and sell the shares because it’s a very high beta stock, any kind of a decline in the equity market is going to just crush the stock simply on volatility alone,” Schlossberg said.
But Johnson and Schlossberg aren’t the only ones on the Street bullish on AMD.
The chipmaker has seen a slew of upgrades from analysts recently.
Last week, Cowen analyst Matthew Ramsay reaffirmed his Outperform rating on AMD and boosted his price target on the stock to $47 following a meeting with AMD CEO Lisa Su.
“We believe AMD’s consistent track record of execution under her leadership, and stable roadmap, is increasingly resonating with customers and investors,” Ramsay wrote in a note to clients.
Then Wells Fargo analyst Aaron Rakers bumped his price target up to $48 from $40.
“We continue to see AMD’s wins in [High Performance Computing] / supercomputing as increasing validation of the company’s strong competitive positioning in datacenter CPUs… thus remaining supportive of our positive upside thesis,” Rakers wrote.
And then there was RBC Capital Markets’ Mitch Steves who said, “We are raising our price target on AMD to reflect improving Data Center demand and increased conviction in share gains through 2020. While 2021 is admittedly unclear, we think 2020 has become more attractive.”