In 2024, semiconductor stocks generally saw outsized returns on account of the artificial intelligence boom. Well, most of them did, anyway — with notable exceptions including Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD).
While Intel’s woes are relatively straightforward — abrupt leadership changes, restructuring, and delay after delay with regard to bootstrapping manufacturing, all occurring while losses continued to mount, the reasons why AMD stock failed to capitalize on the ongoing AI rally are less obvious.
For one, per recent latest benchmarks, AMD’s products can go toe-to-toe with rival Nvidia’s (NASDAQ: NVDA) latest line of offerings — at least in a relatively wide range of use cases. To boot, Advanced Micro Devices stock is trading at a very attractive valuation.
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So, what happened? Simply put, the AI game is looking increasingly like a winner-takes-all scenario. Whereas AMD’s research and development efforts are split between GPUs and CPUs, Nvidia had the luxury of focusing its attention on just GPUs. During the last few years, Nvidia has also constructed a widely-used and robust ecosystem — something that AMD lacks.
In addition, we have to consider the narrative — NVDA stock has become a hot commodity, and enjoys non-stop news coverage — most of it unabashedly positive. However, a small silver lining appeared on December 23 — when AMD stock prices suddenly shot up by 4.52%.
AMD stock rallies on positive analyst commentary
On Friday, December 20, AMD stock closed at $119.21 — by the end of the trading day on December 23, the price of a single AMD share had increased to $124.60. In the premarket trading session for December 24, prices saw an additional, albeit smaller surge up to $126.80 at press time — bringing the total rally up to 6.36%.
Up to this point, Wall Street equity researchers have generally been quite bearish on the stock On December 23, Rosenblatt released new coverage for the tech sector. According to the results of an internal poll among the firm’s analysts, AMD, Meta Platforms (NASDAQ: META), and Micron Technology (NASDAQ: MU) are the top stock picks for 2025.
In a note shared with investors, the analysts stated that they expect to see increasing revenue from both server and data center CPUs, along with increased GPU traction in the coming year.
Based on a 25-times price-to-earnings (P/E) multiple applied to Rosenblatt’s forecasted $10 in earnings per share (EPS) for FY 2026, the firm set a price target of $250 — a figure that equates to a 109.71% upside from the current AMD stock price.
This is certainly a vote of confidence — although readers should note that the price targets set by less bullish investors — even those who rate the stock a ‘Hold’, tend to have price targets well in the double-digits — potentially signaling that the sentiment surrounding Advanced Micro Devices stock is shifting on a wide scale.
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