AMD is catching a wave of AI-driven growth, and Goldman Sachs is riding it. Analyst Toshiya Hari reaffirmed his Buy rating and $175 price target for Advanced Micro Devices (AMD) shares, fueled by the company’s strong position in the burgeoning AI infrastructure market.
Hari points to the ‘AI arms race’ among large enterprises as a key driver of increased capital spending, directly benefiting AMD. This spending is expected to fuel a substantial market for AI accelerators, with AMD projecting a $500 billion market by 2028 – a significant jump from its previous forecast of $400 billion by 2027.
AMD’s product pipeline is brimming with potential, with its upcoming GPUs proving to be strong competitors to Nvidia’s offerings. During AMD’s recent Advancing AI event, CEO Lisa Su revealed the MI325X product, which she claims matches Nvidia’s H200 in training and surpasses it in inferencing performance by 1.4 times.
Investors are also keenly watching AMD’s acquisition of ZT Systems, a deal expected to close in the first half of 2025. This acquisition, according to AMD, will accelerate the company’s ability to offer system-level solutions, further bolstering its presence in the AI landscape.
Beyond AI, AMD is poised to benefit from the rebound in server CPU demand following a downturn in the market. While growth in this segment might be slower compared to GPUs, Goldman Sachs believes AMD is well-positioned to capitalize on this recovery.
Hari anticipates continued market share gains for AMD in the Server CPU market, driven by the company’s focus on Enterprise-specific products. These targeted offerings are expected to translate into substantial revenue growth and margin improvement for AMD, as Enterprise deals typically command higher margins than those with Tier-1 hyperscale customers.
As we approach AMD’s third-quarter earnings report on October 29, analysts are expecting a strong performance. According to Benzinga Pro, analysts anticipate earnings of 92 cents per share and quarterly revenue of $6.708 billion. AMD’s shares are currently trading at $156.59, up 0.4% as of Monday’s publication.