Is It Too Late to Buy AMD Stock?

Merrill Lynch raised AMD stock to Buy all the way up from Underperform, a rare two-notch upgrade. Its price target is $6 for AMD. The research note said, “Exclusive wins in processor chips for next-gen Sony PS4 and Microsoft Xbox One game consoles expected in Q4 can transform AMD into a profitable, diversified company with a multi-year recurring revenue stream, away from its inconsistent past under Intel’s shadow.”

Canaccord Genuity’s upgrades we less aggressive. Its rating still went to Buy, but from a prior Hold rating. Its price target was raised to $5 from $3 in the upgrade.

As far as why Merrill Lynch is so much more aggressive, it sees many issues: pent up console demand from Xbox One and PlayStation4 and gains in market share in graphics against Nvidia (NASDAQ: NVDA). Risks include PC and server market share loss and margins on the console wins.

Also note that FBR Capital Markets raised AMD’s rating to Outperform from Market Perform with a new $5.50 price target back on June 24 as well. The big call was back in March when shares were around $2.60, where Wells Fargo assigned a whopping $5 to $7 valuation for AMD at the time.

Shares were up at $3.98 on Wednesday, and now the two analyst upgrades have AMD shares up 9% at $4.35 on what is already double the normal daily share trading volume as some 47 million shares have traded hands as of 11:25 a.m. EST.

AMD’s stock has now more than doubled from its 52-week low. It may be back up closer to a 52-week high now that its range over the past year is $1.81 to $5.07, but we would also note that this was an $8 stock at the peak of 2012 and a $9 stock in 2011.