Investing.com -- Advanced Micro Devices (NASDAQ:AMD) was caught up in the broader market sell off on Monday despite drawing praise from analysts on Wall Street who believe the chipmaker's new server chip as well as its graphics and PC hardware will strengthen its position against rival Intel (NASDAQ:INTC).
Following a meeting with AMD Chief Technology Officer Mark Papermaster and the unveiling of AMD's new server processor, Cowen upgraded its price target on Advanced Micro Devices (NASDAQ:AMD) to $42 From $40.
AMD fell nearly 4%, however, as investors shunned risk assets generally on fears that a prolonged US-China trade war would weigh on global growth.
The S&P 500 was off 1.1%, and the Nasdaq 100 Index fell 0.8%. The major indexes are down about 5% from their July peaks.
AMD's consistent product execution across personal computing, graphics processing units, and server lines puts the company in a strong position to compete with Intel (NASDAQ:INTC) and could boost gross margin targets and deliver material upside to the 2020 performance, Cowen added.
The praise for the chipmaker's server business has not been without merit; it recently won new business from two tech heavyweights in Google (NASDAQ:GOOGL) and Twitter (NYSE:TWTR). Both will be using the second generation of AMD's processor chip for data centers.
AMD's second generation Epyc server, called "Rome," was launched last week. It has generated a lot of fanfare with some touting its impressive performance metrics, particularly within the context of expected power usage and expected cost.
With cloud customers eager for an alternative source to Intel's server hardware, Wedbush said it expected a favorable server CPU upcycle ahead for AMD.
"AMD's strong initial shipments of Rome are indicative of strong demand for customer test/qualification in our view, a trend we would see as unlikely if AMD's new product did not promise a significant improvement in performance," Wedbush said in a recent client note.
AMD is up 79% this year and has a consensus price target from Investing.com of $33.05.