Not a fan of crypto-mining and all of its indecorous trimmings. But how does this god damned downgrade of AMD by Morgan Stanley make sense? This is a simple if-then scenario, right? If the price of cryptos are at record highs and trending higher, then more people will want to mine for these valuable items. Yes?
Ok, so where is the logic with this downgrade of AMD, who is a major player in providing miners with GPU power to get the damned tokens?
Morgan Stanley reduced its rating for AMD shares to underweight from equal-weight, predicting cryptocurrency mining and gaming console demand for its graphics chip business will falter in 2018.
The company’s shares are down 4 percent in Monday’s premarket session after the report. The stock declined 13.5 percent Wednesday, a day after it gave fourth-quarter profitability guidance below some Wall Street estimates.
AMD’s “fundamental outlook is not quite as robust as microprocessor momentum has been slow to build, offset by cryptocurrency gains,” analyst Joseph Moore wrote in a note to clients Monday. “We believe that AMD’s graphics surge has been caused by a sharp increase in sales of graphics chips to cryptocurrency miners. We expect this to meaningfully decelerate next year.”
Moore lowered his price target for AMD shares to $8 from $11, representing 32 percent downside from Friday’s close.
The analyst predicts cryptocurrency mining driven sales for AMD’s graphics chips will decline by 50 percent next year or a $250 million decline in revenue. He also forecasts video game console demand will decline by 5.5 percent in 2018.
“We expect cryptocurrency to gradually fade from here, consoles to decline, and graphics to be flattish,” he wrote. “To be clear, we admire what the company has accomplished on a fraction of its competitors’ budgets in both microprocessors and graphics – our cautious view is based entirely on the current stock price, and the limited potential for upside in 2018 and beyond.”
He’s predicting a 50% drop in mining related sales, or $250 million. I bet you shitheads thought AMD and NVDA were soaring because MUH video games. Wrong. The entire rally in both AMD/NVDA is predicated on crypto mining. When that party ends, so will the rallies in those stocks.
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Looks like MS wants AMD on the cheap as crytomining and vid-games pickup next year. No doubt MS is the buyer now after they trashed AMD.
This is getting too easy, fade the trouser-wearing nerds at Morgan Stanley
My son just asked me a few weeks ago if his graphics card would overheat if he used it 24/7 to mine crypto. He already has a mining group started with his college buddies where they likely get “free” electricity in the dorms. A colleague at work is taking 4 months paternity leave and told me his plan is to mine crypto during this time with his three new 4-GPU mining rigs, to “learn about blockchain”.
I don’t think mining demand is faltering any time soon.
SOXL rocks on.