After a recent pullback in the broader technology sector left a dent in Advanced Micro Devices (NASDAQ: AMD) stock, analysts believe that data centers and client segments will help the chipmaker carve out its piece of artificial intelligence (AI) pie and recover the losses it endured.
This notion is supported by the semiconductor company’s recent strong Q2 earnings report on July 30. The report revealed that revenue increased by 9% compared to the previous year, reaching $5.84 billion and surpassing analysts’ expectations by $114 million. Adjusted earnings per share (EPS) also saw a 19% growth, rising to $0.69, $0.01 higher than the anticipated $0.68.
Furthermore, to expand its AI venture, AMD recently announced on August 12 an acquisition of Silo AI, the largest private AI lab in Europe, with the $665 million worth purchase aimed at delivering the best possible end-to-end solutions and integrating engineers and scientists from both companies.
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Morgan Stanley sees AMD stock at $178
On July 31, Morgan Stanley’s Joseph Moore raised the price target for Advanced Micro Devices stock by 1.1%, moving it from $176 to $178 while maintaining a “hold” rating.
Moore pointed out that AMD’s guidance for Q3 2024 was stronger than anticipated, with expected revenue between $6.4 billion and $7 billion, reflecting a 16% year-over-year increase at the midpoint. He was particularly impressed by the company’s optimistic outlook on AI, noting that AMD raised its FY 2024 target from $4 billion to $4.5 billion.
Morgan Stanley analyst said, “The good quarter, especially in the context of the sharp pre-print selloff, should be a relief.”
Phillip Securities assigns a $180 target for AMD stock
On August 1, Phillip Securities analyst Jonathan Woo maintained a “buy” rating on AMD shares, with a price target of $180.
Woo anticipates a stronger second half as the MI300X ramp-up continues, the Embedded segment recovers, and demand for the MI300X remains robust. This, combined with a better-than-expected supply ramp-up, prompts AMD to raise its FY24 sales forecast to over $4.5 billion.
AMD is accelerating its AI product rollout to match NVIDIA’s annual pace with new AI accelerators that integrate seamlessly with the MI300X infrastructure.
Woo says, “We believe AMD is still well positioned to capture AI-related investments due to its strong accelerator roadmap while also gaining traditional server market share from enterprise transition to the Cloud.”
Some other analysts disagree with their colleagues on AMD stock
While Moore and Woo reacted positively to the latest earnings report from AMD, other analysts took a more cautious approach.
Truist Securities’ William Stein lowered his price target from $162 to $156 while maintaining a “hold” rating.
Similarly, Cantor Fitzgerald’s C J Muse reduced their price target from $200 to $180, though they kept a ‘’strong buy” rating.
Bank of America’s Vivek Arya adjusted their price target downward from $195 to $180 but maintained a “strong buy” rating.
Despite these downward revisions, the overall sentiment among top-rated analysts remains positive. According to TipRanks, 25 of 31 analysts rate AMD as a “buy,” with only 6 recommending a “hold.” Notably, none of the analysts advise selling the stock.
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