Advanced Micro Devices Inc (NASDAQ: AMD) analysts make a case for the company to gain market share in several sectors as it works to compete against NVIDIA (NASDAQ: NVDA) and grow its AI business, as evidenced in third-quarter results.
The AMD Analysts:
- KeyBanc analyst John Vinh reiterated an Overweight rating with a $220 price target.
- Cantor Fitzgerald analyst C.J. Muse reiterated an Overweight rating with a $180 price target.
- Oppenheimer analyst Rick Schafer maintained a Perform rating with no price target.
- Piper Sandler analyst Harsh Kumar reiterated an Overweight rating and lowered the price target from $200 to $180.
- Roth MKM analyst Suji Desilva maintained a Buy rating with a $200 price target.
- Truist analyst William Stein maintained a Hold rating with a $156 price target.
- Morgan Stanley analyst Joseph Moore maintained an Equal-weight rating and lowered the price target from $178 to $169.
- Goldman Sachs analyst Toshiya Hari maintained a Buy rating with a $175 price target.
- Northland Capital analyst Gus Richard maintained an Outperform rating with a $175 price target.
- Rosenblatt analyst Hans Mosesmann reiterated a Buy rating with a $250 price target.
The analyst said MI300's outlook for 2024 to $5 billion was positive, but the company's fourth-quarter guidance came in below expectations.
"While we are disappointed in 4Q guidance, we're encouraged by the strong results in Data Center across MI300 and server CPU," Vinh said.
Vinh said the strong ramp of MI300 shipments could expand customer adoption in the cloud and AI sectors.
Cantor Fitzgerald on AMD: The company's quarterly results were "disappointing" for Muse.
The analyst said the key takeaway was MI300 doing well.
"We have continued to point to $12B as the magic MI300 target to support $6.00 in earnings power," Muse said.
The analyst believes the company will reach the figure, but the question is whether it will happen in 2025 or 2026.
"In the interim, we view shares largely range-bound in the $150-$170 territory until we gain line of sight to this earnings power."
Oppenheimer on AMD: The company's data center and AI segments were positives in the quarter for Schafer.
"Mgmt's built an impressive AI franchise in short order. From nothing 12 months ago, AI is expected to contribute >$5B this year," Schafer said.
The analyst said investor expectations are out of reach and the bar could be too high.
"We expect Street numbers to come down Wednesday and remain sidelined until the path to sustained upside becomes clearer."
Piper Sandler on AMD: The quarterly results show GPU execution but come with disappointing guidance, Kumar said in a new investor note.
"The highlight of the call was that 2024 GPU revenues are expected to be above $5B, which had been the benchmark for investors," Kumar said.
The analyst said AMD's GPUs and client and server businesses could stand out in the future, while gaming and embedded will be headwinds.
"Overall, we continue to believe AMD is executing flawlessly on its GPU roadmap."
Roth MKM on AMD: The company's data center business could have an upside to continue momentum, Desilva said in a new investor note.
"We are encouraged that the company again raised its CY24 AI GPU revenue expectation with a healthy growth outlook into CY25," Desilva said.
The analyst said AI revenue continues to show strength for the company.
Truist on AMD: The stock price could need a modest "reset" after the disappointing fourth-quarter guidance, Stein said in a new investor note.
The analyst said caution should be exercised given AMD's position in AI compared to NVIDIA Corporation and the company's X86 market, which is under pressure from competition.
Morgan Stanley on AMD: A solid quarter from AMD might not be enough to offset a high bar for AI companies, Moore said in a new investor note.
"We still see 2024-25 as investment years for the AI opportunity, and think revenue/earnings expectations are still too high," Moore said.
The analyst said the risk reward for the stock remains balanced over the short term, with the company's AI product roadmap being key going forward.
"We have also highlighted that expectations are even higher, and unless the view is that AMD can take market share in CY25, which we do not forecast, there won't likely be much sequential growth through the year."
Goldman Sachs on AMD: The long-term AI growth opportunity remains for AMD, Hari said in a new investor note.
"We foresee share gains in traditional compute and the company's participation in AI compute driving revenue growth, margin expansion and earnings accretion over the medium to long-run in excess of the industry average," Hari said.
The analyst said they were encouraged by the company's progress in improving hardware and software offerings.
Hari said future data could show that AMD is taking "meaningful share" in the enterprise market.
Northland on AMD: The company could be narrowing the gap with Nvidia, Richard said in a new investor note.
"AMD is #2 in Data Center AI and that is not a bad place to be," Richard said.
The analyst said investors should consider buying the stock on Wednesday's pullback.
Richard said AMD can continue to grow market share in segments like data center over time.
Rosenblatt on AMD: The company showed market share gains in the quarter and should continue to gain share going forward, Mosesmann said in a new investor note.
"At a high level, Lisa Su indicated an increasingly better competitive dynamic compared to the Nvidia H-series and B-series in 2025, as indicated by significant expansion in customer engagement and milestone accomplishments," Mosesmann said.
AMD Price Action: AMD stock is down 9.8% to $149.96 at the time of publication Wednesday, versus a 52-week trading range of $94.07 to $227.30. AMD stock is up 8.5% year-to-date in 2024.