Despite the market’s focus on the AI opportunity, AMD (NASDAQ:AMD) has not been a beneficiary of the trend in 2024. The stock has only gained 6% year-to-date with concerns the chip giant just doesn’t have what it takes to truly compete with Nvidia in the AI chip space.
So, can the company spring a surprise when it dials in the Q3 print on Tuesday (October 29)?
Susquehanna’s Christopher Rolland, an analyst ranked in the top 1% of Street stock experts, thinks the MI300 accelerators will be the focal point, expecting a “generally in-line guidance driven by MI300/Server, perhaps offset by weakness in PC/XLNX.”
Although the company increased its 2024 MI300 revenue guide to over $4.5 billion last quarter, investors had largely anticipated the $500 million boost and Rolland expects another $500 million increase will be forthcoming, putting the company on track for a total of $5 billion in 2024.
That said, looking ahead to next year, Rolland thinks “buyside expectations for MI300 revenue are too high, believing $9 billion is more likely, rather than $11-$12 billion.
Rolland thinks the Lisa Su-led firm has probably increased its server revenue share due to accelerated enterprise adoption and cloud deployments, as evidenced by strong demand for its Genoa processors. Additionally, the Turin processor’s launch this month offers an “incremental positive” into next year as Intel’s competing products won’t ramp up until 2025.
Beyond the top line, the analyst anticipates gross margins will be “generally in-line” in Q3, with an improvement expected in Q4 due to a higher MI300 mix and a modest recovery in Xilinx. “In short,” Rolland summed up, “we expect in-line guidance, with all eyes on ’24 MI300 guidance.”
To this end, Rolland gives a Positive (i.e., Buy) rating for AMD shares, alongside a $200 price target. Should the figure be met, a year from now, investors will be sitting on returns of 28%. (To watch Rolland’s track record, click here)
Overall, among 31 recent analyst reviews, 25 recommend Buy while 6 advise Hold (i.e. Neutral), resulting in a Strong Buy consensus rating. The shares could appreciate ~21%, with an average target price of $188.96. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
