Despite the big 30 percent gain of AMD shares in the past 30 days, experts remain skeptical of its stability from the fact that AMD’s profit stems from cryptocurrency mining.
Amidst the cryptocurrency explosion, AMD’s Vega GPUs turned out to be the preferred mining tool making up for its lackluster start when it was originally intended for gamers. Analysts are cautioning, however, that AMD’s winning position is shaky.
Bernstein analyst Stacy Rasgon points out that if crypto mining would altogether grind to a halt or if customers go for rival hardware, AMD could suffer from ASP pressures including a unit shortfall. It is interesting to note, though, that AMD confirmed only 10 percent of its total revenue comes from crypto mining.
Joseph Moore of Morgan Stanley is concerned with the cryptocurrency’s possible effects on AMD’s stocks. Also, he cited the company is looking at a forthcoming Nvidia product launch against which they have nothing for at least another 12 months.
“Cryptocurrency strength has to some degree offset the slow and steady progress establishing momentum in desktop and server microprocessors after several years away from those markets — but that higher revenue has driven higher operating expense, which further raises the bar for the processor business if crypto momentum should fade.”
AMD’s stock, according to the 31 analysts following it, is currently a good 12% above the average target level of $14.54, FactSet reported.