After benefiting from sales of graphics processors for mining Bitcoin, Advanced Micro Devices (AMD) and Nvidia (NVDA) are now seeing a lift from mining a different cryptocurrency, Ethereum, investment bank Morgan Stanley said Tuesday.
Morgan Stanley analyst Joe Moore raised his sales estimates for AMD and Nvidia for the fourth quarter and current quarter based on continued strength in cryptocurrency mining, especially for Ethereum, which has seen its price rally recently.
But Moore does not recommend buying either chip stock. He rates AMD as underweight with a price target of 8 and Nvidia as equal weight with a price target of 222.
AMD shares were up 2%, near 12.90, in midday trading on the stock market today. Nvidia was up 2.2%, near 239.
IBD’S TAKE: For the latest news on the cryptocurrency business, check out the IBD page “Bitcoin And Cryptocurrency News And Trends.”
Moore said he had expected mining revenue to “decelerate meaningfully” beginning in the fourth quarter, but higher Ethereum prices have propped up demand.
He cautioned that the cryptocurrency mining business could be masking weakness in notebook and desktop processor sales at AMD. A shortage in AMD graphics cards also could limit opportunities in the company’s “longer-lived gaming business,” he said in a report.