AMD’s latest earnings didn’t do much to change minds, as bulls cheered momentum in new product lines while those on the sidelines expressed concern about margins.

Shares of AMD

AMD, -2.03%

 were off 1.8% on Wednesday after the company posted results in line with expectations while coming up a bit short with the midpoint of its revenue forecast.

Fueling optimism for RBC analyst Mitch Steves was AMD’s disclosure that both revenue and units were up more than 50% sequentially in central processing units (CPUs).

“This is important, as [average selling prices] likely increased materially as about half of the quarter saw some shipments of the new EPYC II chips,” Steves wrote. “Since ASPs increased, it is unlikely that revenue was up 50% in line with units being up 50% quarter over quarter.”

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Less positive for Steves were his estimates that AMD’s semi-custom business dropped more than 50% sequentially. Still, he sees room for this area of the company, which tends to have relatively high operating margins, to contribute more positively in the year ahead.

“Importantly, despite being an ‘unloved’ business, if the console cycle is healthy/solid in 2020, it implies significant operating profits and cash flow for the back half of 2020.”

Steves said that AMD bears may focus on the company’s weaker-than-expected revenue forecast for the fourth quarter, but he attributes that weakness to timing issues and a challenging landscape for the company’s console business, which he deems “not core to the AMD story.” Steves rates the stock at outperform with a $44 target price.

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Susquehanna’s Chris Rolland said he “like[s] the moving parts” despite the “slightly” weaker-than-anticipated report, but he wrote that AMD’s lack of disclosures on product performance remains disappointing.

“We continue to believe that AMD should explicitly break out the Epyc contribution as it should now be a substantial part of EESC [AMD’s enterprise, embedded, and semi-custom segment,” wrote Rolland, who has a neutral rating on the stock and bumped up his price target by a buck to $35. “While the lack of disclosure continues to frustrate us, the narrative suggests that AMD’s higher-value Epyc, Navi and Ryzen 3 products are ramping nicely.”

Low points for Rolland included the significant drop in the semi-custom business and AMD’s operating expenditures, which were “worse in the third quarter as the company continues to support new product ramps,” he wrote.

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Bernstein analyst Stacy Rasgon argued that the report “wasn’t terrible on the surface” if only because investors seemed a bit nervous about the company heading into earnings. While he expects that the company is “almost certainly” still picking up share, he didn’t see any signs of inflection in the latest numbers and calls the next report “a critical test” as it should provide a glimpse at the company’s 2020 outlook.

“As strong as the server ramp is, we believe it is still likely below expectations, and timelines for ‘double-digit’ share now appear to be solidly into 2020,” he wrote. “[Gross margins], even increasing as they are, still feel like more should be coming given the significant product mix shift. And more generally, the sheer scale of the climb in front of them becoming more obvious, with Intel

INTC, -0.37%

 (for now) seemingly mostly unaffected by AMD’s success (~$80 million quarter-over-quarter server gains versus ~$1.4 billion), and potentially making the argument for a ‘transformative’ AMD tougher.”

Rasgon rates the stock at market perform with a $25 target price.

Jefferies analyst Mark Lipacis took the view that AMD is well positioned to take on Intel due to its work with Taiwan Semiconductor Manufacturing Co. Ltd.

TSM, +0.52%


“We think it is important to consider that, as a fabless company, AMD is not working alone; it is working with TSMC which is doing the heavy lifting on developing the next process node,” Lipacis wrote. TSMC’s clients, like Apple

AAPL, -0.02%,


XLNX, -0.48%

 and Qualcomm

QCOM, +0.19%,

are effectively funding development of the next manufacturing process node.” Because TSMC also works with those high-profile clients, Lipacis said it might be more appropriate to look at the “Intel versus AMD” battle as really being an Intel versus “AMD+TSMC+AAPL+XLNX+NVDA” battle.

He rates the stock a buy with a $40 target.

Six analysts hiked their price targets on AMD shares after the report, according to FactSet. Of the 38 analysts tracked by FactSet who cover the stock, 14 have buy ratings, 21 have hold ratings, and three have sell ratings. The shares are up 74% so far this year, as the S&P 500 index

SPX, -0.10%

 has risen 21%.

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