On Wednesday, Stifel reaffirmed its Buy rating and $200.00 stock price target for Advanced Micro Devices, Inc. (NASDAQ:AMD), following the company's robust quarterly financial performance. AMD's revenue surpassed expectations, driven by increasing sales of its MI300 products, market share gains from EPYC Turin processors, and an uptick in Ryzen PC CPU demand.
AMD's management has raised its 2024 MI300 guidance to over $5.0 billion, an increase from the previous forecast of more than $4.5 billion and significantly higher than the initial $2 billion projection. The company's data center revenue soared by 122% year-over-year, reaching $3.5 billion. The MI300 sales are likely to have surpassed $1.5 billion, nearing the revenue levels of AMD's server CPUs.
Stifel's analysis suggests continued robust sales in AI compute as AMD's MI325 series processors are set to ramp up. Despite potential fluctuations in data center infrastructure builds among a few large customers, Stifel expects substantial growth, especially in the second half of the calendar year.
The firm's outlook for AMD remains positive, anticipating the company to capitalize on the ongoing multi-year investment cycle in AI infrastructure. The analyst's commentary indicates that the expectations for AMD's performance align with Stifel's projections.
In other recent news, Advanced Micro Devices (AMD) has been the focus of several analyst reports following its third-quarter results and fourth-quarter guidance. Goldman Sachs (NYSE:GS) maintained a Buy rating on AMD with a $175 price target, despite adjusting its non-GAAP EPS estimates downward by an average of 13% for the years 2024-2026.
BofA Securities also maintained a Buy rating on AMD, projecting robust year-over-year EPS growth rates of 40% and 30% for calendar years 2025 and 2026. Deutsche Bank (ETR:DBKGn) upheld a Hold rating, noting AMD's strong performance in the recent quarter, particularly the MI300 Data Center GPU product family's revenue surpassing expectations.
Evercore ISI raised its price target for AMD to $198, citing the company's strong position in the merchant accelerator market and ongoing market share gains. Citi adjusted its outlook on AMD shares, reducing the price target to $200 due to expected margin pressures from AMD's MI300 product and reduced gaming margins.
Barclays (LON:BARC) maintained its Overweight rating on AMD but reduced the price target from $180 to $170 due to potential headwinds in the client segment.
AMD reported significant growth in its Data Center segment and has increased its revenue forecast for its upcoming MI300 product from over $4.5 billion to more than $5 billion. However, the company anticipates that the MI300 will initially have a dilutive effect on profit margins.
AMD projects its fourth-quarter revenue to be slightly below market expectations, attributing the shortfall to supply chain constraints. In other developments, OpenAI has announced a collaboration with Broadcom (NASDAQ:AVGO) Inc. and Taiwan Semiconductor Manufacturing Company (TSMC) to create its inaugural in-house artificial intelligence chip, incorporating AMD chips to satisfy its growing infrastructure needs.
InvestingPro Insights
To complement Stifel's bullish outlook on Advanced Micro Devices, Inc. (NASDAQ:AMD), recent data from InvestingPro provides additional context to the company's financial performance and market position. AMD's market capitalization stands at an impressive $269.07 billion, reflecting its significant presence in the semiconductor industry.
InvestingPro Tips highlight AMD's strong financial momentum, with the company experiencing a significant return of 72.85% over the last year and a robust 20.09% return over the past three months. These figures align with Stifel's positive assessment and the company's improved performance in the AI and data center segments.
The company's revenue growth of 6.4% in the last twelve months, coupled with a quarterly revenue growth of 8.88%, supports the narrative of AMD's expanding market share and increasing demand for its products. Additionally, AMD's gross profit margin of 51.42% underscores its ability to maintain profitability amid competitive pressures in the semiconductor industry.
It's worth noting that AMD is trading at a high P/E ratio of 198.13, which may reflect investor optimism about the company's future growth prospects, particularly in the AI compute market. This valuation metric aligns with the InvestingPro Tip indicating that AMD is trading at high earnings and revenue multiples.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for AMD, providing a deeper dive into the company's financial health and market position.
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