Shares of Advanced Micro Devices (NASDAQ:AMD) fell in after-hours trading after the chip maker reported its Q1 earnings results. Earnings per share came in at $0.62, which was in line with analysts’ consensus estimate. Sales increased by 2.2% year-over-year, with revenue hitting $5.47 billion. This beat analysts’ expectations of $5.45 billion.
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Artificial intelligence undoubtedly helped the company achieve these results. Data Center revenue jumped by 80% year-over-year to $2.3 billion. The main driver of this segment was AMD’s MI300 AI accelerator. The MI300 is a competitor to Nvidia’s H100 chip and costs about 33% less. It also tends to be better suited for memory-intensive tasks, such as simulations.
CEO Dr. Lisa Su also pointed out that demand was being driven by widespread AI deployment and that AMD is ramping up its Data Center business to “enable AI capabilities across our product portfolio.”
Looking forward, management now expects revenue for Q2 2024 to be between $5.4 billion and $6 billion. For reference, analysts were expecting $5.69 billion in revenue.
Is AMD a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMD stock based on 23 Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 78% rally in its share price over the past year, the average AMD price target of $203.96 per share implies 27.24% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
