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Moody's upgrades Advanced Micro Devices on new product lineup, outlook positive

Moody's upgraded Advanced Micro Devices Inc.'s corporate family rating to Ba2 from Ba3 and senior unsecured rating to Ba3 from B1, with a positive outlook.

The ratings action reflects Moody's expectation of strong revenue growth driven by AMD's improved product offerings, stable balance sheets and expected market share gains. AMD broadened its product base over the last three years by launching its commercial and consumer desktop, mobile and server processors, and a new graphics lineup.

Moody's expects a 25% year-over-year boost in revenue in the second half of the year, followed by strong growth in 2020. Gross margins will rise to the 42% to 43% range, and EBITDA margins will expand to the 13% to 15% range, the rating agency said.

The speculative grade liquidity rating of SGL-1 remains the same. The rating reflects AMD's stable liquidity profile driven by improved debt management and access to a secured credit facility. Moody's projects adjusted gross debt to EBITDA to fall below 2.0x by the end of the year.