I am not sure I agree with the upside target on AMD. I don't hear a lot of hype about AI enable PC right now. It is supposed to one of the drivers of CPU demand in addition to the AMD server offering that is growing fast but is still a small part of revenues.
A lot of people are competing in the GPU/server space AAPL. AMZN, GOOGL and TSLA? AMD coming to market with an offering quickly makes sense as AMD bought ATI the only competitor to NVDA back in the day. The fact other companies are coming to the market with their own offerings, perhaps only for internal use, is a concern.It means the technology moat is not that big. I think NVDA still maintains its edge as they have build an eco-system that takes time to develop.
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Down 33% From Highs, Is AMD Stock a Bargain Buy Right Now?
Sristi Suman Jayaswal - Barchart - Fri May 10, 6:30AM CDT Follow this Author
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Semiconductors are the backbone of innovation, powering our tech-driven world from smartphones to cars, reflecting their critical role in our lives. The demand for Graphics Processing Units (GPU) is booming, especially with the rise of artificial intelligence (AI) and high-performing computing.
Leading the pack is Advanced Micro Devices, Inc. (AMD), lauded for its innovation in the semiconductor industry, especially its cutting-edge microprocessors and graphics chips. While AMD stock surged last year due to AI integration, 2024 brought a sudden stop to its rally. Since March 8, the chipmaker’s shares have plummeted by 32.96% from their 52-week high of $227.30.
Given this pullback, are we looking at a red flag to avoid the shares, or is it a chance to buy shares of the tech innovator at bargain prices amid rising demand for GPUs? Let's have a closer look.
About Advanced Micro Devices StockIncorporated in 1969, Santa Clara-based Advanced Micro Devices, Inc. (AMD) is a prominent semiconductor firm shaping the data center, embedded, gaming, and PC markets. AMD is renowned for pioneering advancements in modern computing. It boasts a market cap of $248.3 billion.
Over the last few years, AMD has emerged as a major player in the semiconductor industry, making significant progress in both the CPU and GPU markets, with its Ryzen processors and Radeon graphics cards gaining traction.
Shares of Advanced Micro have gained 60.3% over the past 52 weeks, outperforming the broader S&P 500 Index's ($SPX) 26.6% returns and the S&P Semiconductor SPDR's (XSD) 31.4% gains.
 www.barchart.comPriced at 9.71 times forward earnings, Advanced Micro trades at a discount to its peers, such as Broadcom (AVGO) and Marvell Technology Inc (MRVL).
AMD’s Q1 Beats Wall Street Projections Shares of the chipmaker fell after the company reported Q1 earnings results on April 30. Although its revenue of $5.5 billion was in line with Wall Street's estimates, it grew just 2.2% annually. Its adjusted EPS rose 3.3% year over year to $0.62, also narrowly beating analysts' estimates.
Data center revenue rose 80% to $2.3 billion, driven by the MI300 series, while client segment revenue surged 85% to $1.4 billion, with Ryzen AI chips leading. Although gaming and embedded segments declined, they are expected to bounce back later this year.
Plus, MI300 accelerator sales have crossed the $1 billion mark since Q4 2023, with AMD's processors powering cloud operations for tech giants like Google (GOOG), Amazon (AMZN), and Oracle (ORCL).
AMD's EVP, CFO, and Treasurer Jean Hu said, “Moving forward, we are well positioned to continue driving revenue growth and margin improvement while investing in the large AI opportunities ahead.”
For Q2, the company anticipates revenue of $5.7 billion (plus or minus $300 million), representing a 4% sequential increase and a 6% annual increase. It projects AI chip sales to reach $4 billion this year, higher than the $3.5 billion revenue forecast issued in January 2024.
Analysts tracking Advanced Micro Devices predict its EPS to grow to $2.62 in fiscal 2024, up 31.7% annually, and then another 67.9% to $4.40 in fiscal 2025.
What Do Analysts Expect For Advanced Micro Stock?Analysts at multiple brokerage firms trimmed their price targets on AMD after earnings, including UBS (UBS) and Bank of America (BAC). But overall, AMD still has a consensus “Strong Buy” rating. Of the 34 analysts covering the stock, 28 advise a “Strong Buy,” one suggests a “Moderate Buy” rating, and the remaining five give a “Hold.”
 www.barchart.comThe average analyst price target for Advanced Micro is $192.37, indicating a potential upside of 26.2%. The Street-high target price of $265 suggests that the stock could rally as much as 73.9%. |
