AMD higher as 2 analysts unveil new price targets ahead of Q4 earnings

Advanced Micro Devices  (AMD) – Get Free Report shares moved higher in early Monday trading ahead of the chipmaker’s fourth-quarter earnings later this week, following a series of price target boosts from Wall Street tied to its new AI-focused chip for the $400 billion data-center market.

AMD, which last month launched a new AI-focused chip aimed at challenging the early market dominance of Nvidia  (NVDA) – Get Free Report, has added more than $130 billion to its overall market value over the past three months. That’s as investors continue to reprice stocks across the whole of the artificial-intelligence sector. 

AMD’s new MI300X, a graphics-processing unit designed to support generative artificial intelligence technologies, is expected to produce around $2 billion in sales over the coming year as the group leverages its new launch against Nvidia’s ability to meet the global surge in demand.

Tech analysts say AMD’s MI300X carries more memory, with speed, than Nvidia’s top-selling H100. 

Nvidia’s massive order backlog as well could give AMD an advantage in early sales as it can meet client needs in the near term while Nvidia is focused on producing and delivering chips that were purchased last year.

AMD CEO Lisa Su

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AMD Chief Executive Lisa Su told investors last month that large language models “continue to increase in size and complexity, requiring massive amounts of memory and compute,” adding that “the availability of GPUs is the single most important driver of AI adoption.”

2 key analysts raise price targets on AMD

Reports have suggested that both Amazon  (AMZN) – Get Free Report and Microsoft  (MSFT) – Get Free Report could be potential customers for the MI300X, with Su suggesting the overall market for AI-related GPUs could grow to around $400 billion by 2027.

Susquehanna analyst Christopher Rolland boosted his price target on AMD by $40 to $210, the highest on Wall Street, citing the importance of the MI300X outlook. 

Bank of America analysts lifted their AMD price target by $30, to $195 per share but cautioned that the stock could see a “modest correction” after what the investment firm expects to be earnings in line with Wall Street estimates. AMD reports after the close of trading Tuesday.

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Analysts expect AMD to post a bottom line of 77 cents a share for the fourth quarter, an 11.6% increase from the same period in 2022, with revenue rising 9.3% to $6.1 billion.

AMD last forecast fourth-quarter sales in the region of $6.1 billion, plus or minus $300 million, with gross margins of around 51.5%. That outlook followed a mixed third-quarter-earnings report that showed big gains in PC revenue had partly offset the ongoing decline in gaming.

KeyBanc: Genoa GPUs also an AMD focus

KeyBanc Capital Markets analyst John Vinh, who carries an overweight rating with a $195 price target on AMD, says investors are likely to focus on both the MI300X outlook as well as the group’s newly developed Genoa GPUs when Su speaks to investors following the earnings release.

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“We expect AMD to post higher results and higher guidance, on strong server results, as we expect improving Genoa demand, despite traditional server weakness and slightly lower-than-expected PC demand after 3Q pull-ins,” Vinh said. 

“We see customer traction for MI300X positively inflecting, which should support upside to the $2 billion outlined by management for 2024,” he added.

AMD shares were marked 1.6% higher in premarket trading to indicate an opening bell price of $180.06 each, a move that would extend the stock’s six-month gain to around 57%.

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