Mizuho analyst Vijay Rakesh reiterated a Buy rating on Advanced Micro Devices, Inc
The analyst hosted Mark Papermaster, CTO & EVP at AMD, for a panel discussion at the Mizuho Software Conference 2023.
AMD could see tailwinds for AI infrastructure adoption with a potential commercial solid interest in open-source hardware provided by MI300A/ X.
As the AI TAM grows over time, different hardware architectures could all continue to see increased adoption and benefit, including CPU, GPU, and custom ASICs.
Rakesh believes CUDA and ROCm software containers co-existing as AMD implements HIP for data portability could resolve many data portability issues.
The analyst flagged increased focus on software with headcount up 5x to 5000 employees over the last few years. He believes Siena provides a low-power roadmap with 64 cores/70-100W envelope in telco/edge and hyperscale.
Rakesh sees AMD as well-positioned to capture market share with MI300X in 1H24E.
AMD continues to execute strongly on its roadmap with a potential AI tailwind from its MI300A/X ramp in 4Q23E/2024E and sees it as attractive vs. Nvidia Corp
Rakesh projects 3Q revenue of $5.70 billion vs. consensus $5.69 billion and EPS of $0.71 vs. consensus $0.68. He anticipates 4Q revenue of $6.44 billion vs. consensus $6.38 billion and EPS of $0.93 vs. consensus $0.88. Rakesh expects FY23 revenue of $22.85 billion vs. consensus $22.81 billion and EPS of $2.83 vs. consensus $2.76.
KeyBanc analyst John Vinh had an Overweight rating on AMD with a price target of $160.
Vinh's quarterly supply chain findings are mixed. China demand remains weak but does not appear to be getting meaningfully weaker, while he sees pockets of recovery within the PC and smartphone markets. Additionally, Vinh sees progress associated with inventory destocking in the channel. AI data center demand remains extremely strong, outstripping supply by ~20%, given limited CoWoS capacity.
Despite concerns regarding Huawei reentering the market, the Android smartphone supply chain is seeing rush order activity.
The customer's initial response to the MI300X has been very positive, especially on the hardware front. At the same time, performance issues appear to be software-related and will likely be resolved by the end of the year.
Assuming these issues are resolved promptly, AMD has enough capacity to support $3 billion - $4 billion in data center GPU revenue in 2024. MI300A is slightly delayed but still expected to ship and ramp in 4Q23 and estimates this represents a $400 million - $500 million opportunity.
The analyst fine-tuned estimates, trimmed 4Q23, and assumed El Capitan ramps more meaningfully in 1Q24.
Vinh projects 3Q revenue of $5.71 billion and EPS of $0.69. He sees 4Q revenue of $6.45 billion and EPS of $0.94. Vinh expects FY23 revenue of $22.87 billion and EPS of $2.81.
Price Action: AMD shares traded lower by 3.26% at $99.91 on the last check Tuesday.
