BofA calls AMD only chipmaker capable of challenging Intel, NVIDIA

Research firm Merrill Lynch upgraded AMD (AMD) two notches Thursday, arguing that the semiconductor firm, which in recent years has stood as an also-ran to Intel (INTC) and NVIDIA (NVDA), is the only chipmaker capable of challenging the two titans. MERRILL DOUBLE-UPGRADES AMD: Upgrading AMD two notches to Buy from Underperform, Bank of America Merrill Lynch analyst Vivek Arya argued Thursday that the chipmaker is "the only vendor that can challenge" both Intel in PCs and servers, and NVIDIA in graphics and machine learning. AMD is standing in front of a $50B duopolistic addressable opportunity and holds less than 5% value share, Arya said, adding that "any success" would be highly accretive to the company's operating model. Building out his Buy thesis, the analyst also contended that AMD has shown "strong capability" in semi-custom chips and patent monetization, creating more potential growth leverage. Relatively new CEO Lisa Su, meanwhile, has "delivered a strong turnaround" and the company is "steadily" reclaiming share in its growth markets even as its recent refinancing eased debt concerns, the analyst added. For fans of contrarian indicators, Arya noted that Wall Street remains largely sidelined on the stock with just 25% of research firms holding Buy ratings; the meager expectations "should create substantial potential for EPS revisions," he argued. Net-net, AMD's growth options are simply "too large to ignore," leading Arya to set a $12 price objective on the shares alongside a $15+ bull case and $7 bear case. PRICE ACTION: Shares of AMD are up 10% to $10.52 in afternoon trading, while NVIDIA has slipped 1.25%. Intel is slightly outperforming the market's broader move higher, rising 1.4% to $35.99 per share.