Shares of the semiconductor company Advanced Micro Devices (NASDAQ:AMD) hit an all-time high of $184.92 on Thursday, January 25. This comes ahead of the company’s planned release of fiscal fourth quarter 2023 financial results on Tuesday, January 30.
AMD stock has risen nearly 140% over the past year, outperforming the S&P 500’s (SPX) gain of about 20%. The rally in AMD stock is fueled by investors’ enthusiasm for AI (Artificial Intelligence) technology and an expected increase in AMD’s market share in the AI segment.
Notably, the company’s CEO, Lisa Su, views AI as a multi-billion-dollar growth opportunity. To capitalize on the thriving AI market, it launched the MI300X accelerator, a product to compete with Nvidia (NASDAQ:NVDA).
With this backdrop, let’s look at analysts’ Q4 estimates for AMD.
AMD – Q4 Analysts’ Estimâtes
Analysts expect AMD to post revenue of $6.13 billion in Q4, up from $5.6 billion in the prior-year quarter. Higher Data Center revenue is likely to be partially offset by weakness in the Gaming and Embedded segments.
Thanks to the higher revenues, analysts expect AMD’s bottom line to increase year-over-year and sequentially. Analysts expect AMD to post earnings of $0.77 per share in Q4 compared to an EPS of $0.69 in the prior year quarter. Further, AMD reported an EPS of $0.70 in Q3.
Analyst Lifts AMD’s Price Target Ahead of Q4 Earnings
Timothy Arcuri of UBS increased the price target on AMD stock to $220 from $135 on January 25. The analyst expressed optimism over AMD’s data center GPU revenue growth opportunity. He stated that customers’ feedback affirmed his belief that AMD has secured a strong demand commitment for over 400,000 MI300A/X units in 2024.
The analyst believes that the substantial growth prospects in the Data Center segment should significantly contribute to the company’s earnings in the upcoming years.
Is AMD a Buy, Sell, or Hold Today?
Wall Street analysts are bullish about AMD stock ahead of Q4 earnings. It has 28 Buy, and eight Hold recommendations for a Strong Buy consensus rating. However, as AMD stock has risen substantially, analysts’ average price target of $158.53 implies 12.09% downside potential from current levels.
