In 2022, tech stocks faced difficulties amidst challenging macroeconomic conditions. However, a year later, the surge in artificial intelligence (AI) initiatives ignited significant momentum, propelling numerous sector components to unprecedented levels. And this is where Advanced Micro Devices (NASDAQ: AMD) comes into play.
2023 was a year of rebirth, but 2024 brought new highs that posed a question: where can this stock end up?
With the aim of expansion comes the question of how much, and by utilizing AI predictions, Finbold aims to provide a potential answer to this dilemma.
Machine algorithms predict a further increase for AMD stock, putting its price at the $241.90 value by the year’s end. This would signify a 59.92% increase from the current level of $168.83 at the time of writing.
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A strong case for further AMD stock growth
Despite a 24% decline in embedded segment sales during Q4, management maintains confidence in the segment’s long-term growth trajectory. Additionally, AMD augmented its AI software ecosystem by acquiring AI software leader Mipsology and open-source AI software expert Nod.ai last year.
The company experienced enhancements in its fundamentals throughout the previous year, driven by heightened demand for its graphic processors. AMD’s recent fourth-quarter and full-year results underscored the company’s robust position within the semiconductor sector.
During the fourth quarter, the data center segment witnessed a 38% year-over-year revenue growth, reaching $2.3 billion. This growth was fueled by accelerated customer adoption of AMD Instinct GPUs and 4th Gen AMD EPYC CPUs.
Fourth-quarter total revenue reached $6.2 billion, reflecting a 10% year-over-year increase. Diluted earnings per share (EPS) for the quarter stood at $0.41, a significant rise from $0.01 in the corresponding period of the previous year. Earnings met consensus estimates, while revenue surpassed expectations.
Could financial results be bearish at the same time?
While the financial results posted by AMD in the latest quarter are showcasing growth, it might not be enough compared to its peers.
In the previous quarter, revenue and non-GAAP earnings per share increased by only 4%, falling short of the expectations of the considerable hype surrounding AI technology.
Despite the limited progress in the underlying business, AMD stock has more than doubled in value over the past year.
While Nvidia (NASDAQ: NVDA) has emerged as a clear beneficiary of the AI trend, AMD has witnessed substantial spikes in its share prices without a corresponding improvement in its financial performance.
What do technicals say for Advanced Micro Devices?
Regarding the technicals, AMD demonstrates strong positive trends both in the short and long term. Yearly performance data indicates that it outperforms 97% of all stocks and 95% of its industry peers. The stock’s current trading position near its 52-week high aligns with broader market trends.
Charts showcase a support zone from $171.04 to $171.90, created by various trend lines and significant moving averages across multiple time frames.
Additionally, there is a resistance zone from $177.67 to $180.34, formed by multiple trend lines across various time frames.
The final verdict
As the AI era progresses, the demand for high-performance graphic processors is expected to rise, which bodes well for AMD’s long-term growth prospects. Analysts anticipate a 13.8% increase in revenue and a 37.7% rise in earnings year-over-year for 2024.
Wall Street sentiment toward AMD is overwhelmingly positive, with a ‘strong buy’ rating from most analysts. Of the 34 analysts covering the stock, 29 rate it as a ‘buy,’ five indicate a ‘hold’ recommendation, and none opted for ‘sell.’
With an average target price of $194.16, the stock is projected to have a 14.29% upside potential in the next 12 months. Its high target price of $270 implies a potential upside of 57% from the current levels.
Slow but steady has been the name of the game for AMD stock, which fails to captivate more significant gains from the current AI hype but constantly adds to its valuations thanks to the solid financials and positive market sentiment.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.