BARCLAYS: AMD can't be saved by cryptocurrencies

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There is a lot of hype around cryptocurrencies right now, but it won't be enough to save AMD.

Bitcoin has forked, bitcoin cash is higher than investors thought, and most cryptocurrencies are growing at rates that are hard to keep track of. This hype has given a boost to companies like AMD and Nvidia, who's graphics cards are selling like crazy as miners try to grab their piece of the cryptocurrency tidal wave.

But, cryptocurrencies are incredibly volatile, and interest in mining them isn't a reliable source of revenue for the chip makers, Barclays analyst Blayne Curtis said in a client note sent out on Tuesday.

"The release of the recent Mercury data showsthat AMD’s PC business was actually down in June (desktops only up slightly despite Ryzen launch and Mobile down) and therefore GPUs drove essentially all of the beat in June (and likely September too,)" Curtis wrote. "Investors should place very little value on this earnings stream."

Cryptocurrency mining works on a regular CPU, but a GPU that is traditionally used for gaming is good at the type of math needed to verify payments for a lot of cryptocurrencies. Adding a GPU to a mining setup will make it faster, giving a miner a higher chance of getting rewarded for helping to verify payments made through cryptocurrency platforms.

Investing in these chip companies is all about believing that their technology is better than the competition, and Curtis doesn't believe AMD is where it needs to be. AMD's data center and CPU chips don't stack up well against Intel and Nvidia's offerings, according to Curtis.

Even if AMD did have the best chip, buying one and only using it for cryptocurrency mining isn't really worth it anymore.

"By our math, it is already unprofitable to purchase a GPU at retail price for Ethereum mining let alone the 1.5-2x they are selling for," Curtis said.

AMD is up 12.86% so far this year, trading around $12.77 a share. Curtis is bearish on the stock and has a price target of $9.

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