AMD shares shrug off impact of crypto mining decline to hit record high

September 05, 2018
Chris Wheal

Shares in Advanced Micro Devices (AMD) closed at new record high on Tuesday and continued to rise in pre-market trade on Wednesday, suggesting its crypto mining-related losses from earlier in the year had been forgotten.

GPU rigs at a cryptocurrency mining operation

Wall Street analysts looked favourably on the stock, with price target upgrades from Jefferies, Cowen & Co on Tuesday. Data from FactSet revealed that of the 30 analysts that cover AMD stock, 13 have “buy” or “overweight” ratings, 13 were rated “hold” and only four were rated “sell”.

Mining boost

AMD reported profits in all four past quarters after reporting losses in 12 of the previous 14. The increased earnings from the company was partially linked to the rise in bitcoin prices late in 2017: AMD’s GPU graphics units are widely used in cryptocurrency mining gear.

When cryptocurrency prices began to rapidly fade in the second quarter of 2018 it was widely expected that mining activity would decrease and profits at companies that produce crypto mining components would slow.

On Tuesday, however, AMD closed at record $28.06 – up 11.5% on the day – and was up a further 1% to $28.35 in pre-market trade on Wednesday.

Analysts

Mark Lipacis, analyst at Jefferies raised his target price on AMD to $30 from $22 as the company’s technology and execution surpasses that of chief rival Intel for the first time.

Similarly, Matthew Ramsay at Cowen raised his target price on the AMD stock to $30 from $25, saying he saw a “tough set up for the bear thesis” now the company had moved beyond certain expected obstacles – including declining contributions from cryptocurrency mining.

Rival NVIDIA is also trading at record levels thanks largely to the growing popularity of its new generation of graphics cards – also popular in crypto-mining rigs.

Its shares were up 1.1% on Tuesday to $283.70.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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