Susquehanna Downgrades AMD (AMD) to Negative; 'ETH Mining Gets its ASIC'

(Updated - March 26, 2018 7:21 AM EDT)

(updated to add analyst comments)

Susquehanna downgraded AMD (NASDAQ: AMD) from Neutral to Negative with a price target of $7.50 (from $13.00).

Analyst Christoper Rolland said they confirmed that Bitmain has developed an ASIC for Ethereum mining. They believe Ethereum-related GPU sales account for nearly 20% of AMD’s total revenue (and ~10% of NVDA).

Rolland said while this call is likely early (in front of needed GPU channel replenishment), the proliferation of Ethereum mining ASICs have the ability to impact ~20% of AMD's total company revenue (and ~10% for NVDA).

He said the commercialization of this ASIC, coupled with: 1) continued pressure on Ethereum coin prices ($530 today, down from a peak of $1,385 in January); 2) a potential move from PoW to PoS (perhaps in 2019); 3) additional Chinese chip makers developing Ethereum ASICs; and 4) the potential for increased secondary market GPU sales, potentially cannibalizing future GPU sales, compels us to downgrade shares of AMD to Negative and lower our price target to $7.50.

Additionally, they have learned of the development of another hyperscale AI ASIC, similar to Google’s TPU2, that begins production in 2Q18 and may reduce AI GPU growth in the data center.

For an analyst ratings summary and ratings history on AMD click here. For more ratings news on AMD click here.

Shares of AMD closed at $10.63 Friday.

You May Also Be Interested In

• Piper Sandler Downgrades AppLovin Corp (APP) to Neutral
• William Blair Downgrades LegalZoom.com Inc (LZ) to Market Perform
• Susquehanna Reiterates Positive Rating on Pinterest Inc (PINS)