Analyst Note| Abhinav Davuluri, CFA |
AMD reported its sixth 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 50% revenue growth for the full year (up from 37%). We believe this guidance should be easily attainable, particularly as Intel deals with manufacturing challenges. Our fair value estimate for narrow-moat AMD is $101 per share on a probability-weighted basis as we await AMD’s acquisition of Xilinx. We assess AMD’s standalone fair value at $91 per share. We assign a 75% probability of AMD’s acquisition of Xilinx closing, and our fair value for the combined entity would be $104 per share.