The artificial intelligence (AI) trend this year has fired up the technology sector.
So far in 2023, tech stocks, in particular, have skyrocketed. The stock of semiconductor company Advanced Micro Devices (NASDAQ: AMD) has also risen this year. It is, however, still trading 22% below its 52-week high, presenting investors with a buying opportunity.
Wall Street is bullish on AMD stock
Analysts on Wall Street see huge upside potential for AMD stock in the next 12 months. According to TipRanks, Wall Street is bullish on AMD, recommending the stock as a ‘Strong Buy’ over its performance in the past three months. The stock is rated a ‘Buy’ by 22 of the 29 analysts who follow it and a ‘Hold’ by seven. None of the analysts rated it a ‘sell.’
At the time of publication, AMD’s share price stood at $103.27. Based on the average analyst target price of $140.25, investors who purchase AMD stock now could profit by up to 40% in the next 12 months.
The highest estimate for AMD is $170 per share (a gain of 64.6%), while the lowest estimate is $95 per share (a loss of 8%).
AMD’s fundamentals could improve in the next few years
AMD’s second-quarter earnings disappointed investors, with revenue falling 18% to $6.5 billion and net profit slipping 44% to $1.7 billion.
AMD intends to release its MI300 chips in Q4, which it believes will result in double-digit revenue growth. As more businesses shift to AI, AMD’s new products should be in high demand.
Analysts expect AMD’s revenue and earnings to grow 10% and 56%, respectively, over the next five years. AMD’s valuation appears to be fair for a growth stock at the moment, with a forward price-to-sales ratio of 6 and a forward price-to-earnings ratio of 29.
AMD stock price chart analysis
AMD shares have been following a declining parallel pattern since June over the daily time frame. The stock price could recover once it manages to break out of the falling pattern.
On October 3, the stock closed 3% lower at $100.08 per share, with the current support level at $101.50.
Finally, AMD has outperformed the S&P 500‘s 10% gain year-to-date, with a 54% surge.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.