According to Bank of America, Advanced Micro Devices (AMD) is the most “under-owned U.S. semiconductor stock” among active fund managers.
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In a new report, Bank of America (BAC) writes that active ownership of AMD stock has dropped to 20% of fund managers in August of this year from 23% in May and 39% a year ago. Advanced Micro Devices’ relative weighting in the S&P 500 is down 80% year-over-year, making it the least-owned chip stock in the benchmark index.
The decline in ownership of AMD stock comes despite consensus expectations for 22% sales growth this year. Bank of America noted the under-ownership as it reiterated a Buy rating on AMD stock, saying the company should gain from rising artificial intelligence (AI) demand for its microchips and processors.
Gaining Market Share
In its report, Bank of America also noted that Advanced Micro Devices continues to gain market share from rival Intel (INTC) and better compete against market leader Nvidia (NVDA). “We reiterate Buy and expect it to benefit from rising tide of AI deployments and continued share gains,” wrote analysts at the bank.
Nvidia remains the most widely held semiconductor stock and is currently owned by 75% of fund managers. Bank of America noted that other overweight chip stocks include KLA (KLAC), Broadcom (AVGO), Micron (MU), and Cadence Design Systems (CDNS). AMD’s share price is up 33% this year.
Is AMD Stock a Buy?
The stock of Advanced Micro Devices has a consensus Moderate Buy rating among 35 Wall Street analysts. That rating is based on 25 Buy and 10 Hold recommendations made in the last three months. The average AMD price target of $184.74 implies 14.82% upside from current levels.
