Advanced Micro Devices (NASDAQ: AMD) recently reported its fiscal Q3 earnings, revealing a mixed bag that left investors divided.
The company’s earnings per share met expectations at $0.92, while revenue exceeded predictions at $6.8 billion, compared to the anticipated $6.7 billion.
Despite these positive results, AMD’s stock tumbled over 9% following a conservative Q4 revenue outlook of $7.2 billion to $7.8 billion, below Wall Street’s midpoint estimate of $7.55 billion.
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At the time of writing, AMD is trading at $141.86, reflecting a one-month loss of 10%.
Given this lukewarm market reaction, Finbold consulted ChatGPT-4o to gain a clearer perspective on AMD’s year-end prospects. The models predict that AMD’s stock could rise to between $170 and $180 by the end of 2024, driven by several key growth factors.
Key factors driving AMD stock price
AMD’s data center segment continues to be its primary growth engine, contributing $3.5 billion in revenue for Q3.
This marks a significant 25% sequential growth and an impressive 122% increase year-over-year. The robust performance in this segment was driven by strong demand for its Instinct GPUs and EPYC CPUs.
These products have seen widespread adoption among major cloud providers, including Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META), and have been deployed by enterprise clients such as Adobe (NASDAQ: ADBE), Boeing (NYSE: BA), and Nestle, showing AMD’s growing influence in the data center market.
The upcoming production of the Instinct MI325X chip, expected by late 2024, is also set to help AMD capture a larger share of the data center market, reinforcing its position as a formidable competitor.
However, the landscape remains intensely competitive, particularly with Nvidia (NASDAQ: NVDA) Blackwell chip entering the market at a highly competitive $30,000 price point, exerting significant pressure on AMD.
Moreover, AMD faces additional hurdles with reduced CoWoS wafer bookings at Taiwan Semiconductor Manufacturing Company (NYSE: TSM) for 2025, as highlighted by Morgan Stanley, driven by uncertain demand for the MI325X.
Amid these challenges, the acquisition of ZTE Systems will enable AMD to offer end-to-end data center solutions, improving its competitive positioning and potentially accelerating revenue growth through faster deployments and broader market reach.
Moreover, the company’s forward P/E ratio of 30.93 suggests that investors expect significant earnings growth in the near future.
AI prediction for AMD stock by year-end
Given these factors, AI-driven models predict that AMD’s stock could reach between $170 and $180 by the end of 2024.
This reflects a balanced view of AMD’s strong growth drivers, particularly in the data center and AI segments, and the competitive pressures it faces from Nvidia.
While the upside is supported by solid fundamentals and product innovation, the risks associated with market competition and production constraints temper expectations, leading to a more measured projection within this range.
