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AMD limps into 2018 as chipmaker goes from first place to last

[NEW YORK] For Advanced Micro Devices Inc bulls, 2017 was a year to forget.

AMD finished the year dead last in the Philadelphia Semiconductor Index after quadrupling in 2016. The gains catapulted the chipmaker to the best return among technology companies in the Nasdaq Composite Index. It also ratcheted up expectations for financial performance that AMD was unable to meet.

"Expectations are for them to have a significant beat, so there's been some disappointments," Hans Mosesmann, a Rosenblatt Securities Inc analyst, said in an interview. "That's why the stock is kind of languishing here."

AMD was one of only four companies in the 30-member semiconductor index to lose value in 2017. Semiconductor stocks, led by Micron Technology Inc and Nvidia Corp, were among the year's best performers with a 38 per cent gain.

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Despite falling 9.4 per cent this year, AMD is still up more than 250 per cent since the beginning of 2016 and there are signs that 2018 could be brighter. The Sunnyvale, California-based company is poised for further server design wins in coming months and gross margins should improve throughout the year, Macquarie analyst Srini Pajjuri said in a Dec 18 note upgrading the stock to neutral from underperform.

That hasn't deterred bears from increasing bets against AMD. Nearly a quarter of outstanding shares are being utilised by short sellers, a 52-week high, according to Markit data.

Mr Mosesmann, who rates the stock a buy, expects the company to incrementally add market share over the next several years and foresees competitors like Intel Corp growing at a slower pace as a result.

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