Analyst Note| Abhinav Davuluri, CFA |
AMD reported its eighth consecutive quarter of double-digit revenue growth thanks to broad-based PC, server, and game console strength. Management is confident in the firm’s product pipeline for 2021 and now expects 65% revenue growth for the full year (up from 60%). We believe this guidance should be easily attainable, particularly as Intel deals with manufacturing challenges. We are maintaining our fair value estimate for narrow-moat AMD of $109 per share on a probability-weighted basis as we await AMD’s acquisition of Xilinx. We assess AMD’s standalone fair value at $98 per share. We assign a 75% probability of AMD’s acquisition of Xilinx closing, and our fair value for the combined entity would be $112 per share. With shares up 35% over the past three months, we recommend prospective investors wait for a pullback.