AMD’s (AMD) recent third-quarter earnings report has sparked a flurry of activity among analysts, with opinions ranging from cautiously optimistic to more reserved. While the company delivered solid results, particularly in the data center segment, the fourth-quarter guidance fell short of expectations. Despite the mixed signals, however, the consensus seems to point towards a positive long-term outlook for AMD, driven by its growing AI business and potential to gain market share from industry leader Nvidia (NVDA).
Here’s a breakdown of key insights from various analysts:
KeyBanc Capital Markets:
John Vinh, KeyBanc’s analyst, maintained an Overweight rating with a $220 price target. He highlighted AMD’s strong data center segment revenue, which surged 122% year-over-year, as a positive factor. Vinh also expressed optimism about the outlook for MI300, AMD’s high-performance computing chip, projecting $5 billion in revenue for 2024. However, he acknowledged that the company’s fourth-quarter guidance was below expectations. Vinh believes that the strong ramp-up of MI300 shipments could lead to increased customer adoption in the cloud and AI sectors.Cantor Fitzgerald:
C.J. Muse, Cantor Fitzgerald’s analyst, reiterated an Overweight rating with a $180 price target. He described AMD’s quarterly results as “disappointing” but emphasized the positive performance of MI300. Muse predicts that MI300 will contribute significantly to AMD’s earnings power, potentially reaching $12 billion in revenue, though the timing remains uncertain—possibly 2025 or 2026. Until this earnings power becomes more evident, Muse expects AMD’s stock to trade within a range of $150 to $170.Oppenheimer:
Rick Schafer, Oppenheimer’s analyst, maintained a Perform rating but provided no price target. He acknowledged the strong performance of AMD’s data center and AI segments, highlighting the impressive growth of the AI business from virtually nothing just a year ago. However, Schafer cautioned that investor expectations might be too high and advised a wait-and-see approach until the path to sustained upside becomes clearer.Piper Sandler:
Harsh Kumar, Piper Sandler’s analyst, reiterated an Overweight rating while lowering his price target from $200 to $180. He praised AMD’s execution in the GPU market but noted the disappointing guidance. Kumar believes that AMD’s GPUs and client and server businesses are poised for future growth, while gaming and embedded segments may present challenges. Despite the headwinds, he remains confident in AMD’s ability to execute its GPU roadmap flawlessly.Roth MKM:
Suji Desilva, Roth MKM’s analyst, maintained a Buy rating with a $200 price target. She expressed optimism about AMD’s data center business and its potential to continue its strong momentum. Desilva pointed to AMD’s increased AI GPU revenue expectations for 2024 and a healthy growth outlook into 2025. She sees continued strength in AMD’s AI revenue.Truist Securities:
William Stein, Truist’s analyst, maintained a Hold rating with a $156 price target. He advised caution due to AMD’s position in AI relative to Nvidia and the pressure AMD’s X86 market faces from competition. Stein believes the stock price might require a modest reset following the disappointing fourth-quarter guidance.Morgan Stanley:
Joseph Moore, Morgan Stanley’s analyst, maintained an Equal-weight rating and lowered his price target from $178 to $169. While acknowledging AMD’s strong quarter, he expressed concern that it might not be enough to offset the high expectations set for AI companies. Moore believes that 2024 and 2025 will be investment years for the AI opportunity and that current revenue and earnings expectations are likely too high. He anticipates a balanced risk-reward for AMD in the short term, with the company’s AI product roadmap being crucial for future success.Goldman Sachs:
Toshiya Hari, Goldman Sachs’ analyst, maintained a Buy rating with a $175 price target. He remains optimistic about AMD’s long-term AI growth opportunity, predicting revenue growth, margin expansion, and earnings accretion that will exceed industry averages over the medium to long term. Hari is encouraged by AMD’s progress in improving hardware and software offerings and believes the company is taking meaningful share in the enterprise market.Northland Capital Markets:
Gus Richard, Northland’s analyst, maintained an Outperform rating with a $175 price target. He acknowledges AMD’s position as the number two player in data center AI, considering it a strong position. Richard advises investors to consider buying the stock on Wednesday’s expected pullback, as he believes AMD will continue to gain market share in segments like data center over time.Rosenblatt Securities:
Hans Mosesmann, Rosenblatt’s analyst, reiterated a Buy rating with a $250 price target. He emphasized AMD’s market share gains in the quarter and anticipates further growth in the future. Mosesmann highlighted CEO Lisa Su’s indication of an improved competitive dynamic against Nvidia’s H-series and B-series chips in 2025, citing increased customer engagement and significant milestones achieved.Overall, the mixed signals surrounding AMD’s recent earnings report highlight the company’s ongoing battle for market share in the rapidly evolving AI landscape. While the fourth-quarter guidance may have disappointed some, the strong performance of AMD’s data center and AI segments, coupled with the potential for significant future growth, suggests that AMD remains a key player in the AI race. The coming months will reveal how effectively AMD can navigate the competitive landscape and capitalize on the burgeoning AI market.
