American chipmaker Advanced Micro Devices (AMD) has received bullish reviews from analysts, despite a decline in its stock following the release of its Q4 results earlier this week. Four-star-rated analyst Hans Mosesmann from Rosenblatt Securities reaffirmed his Buy rating on AMD stock, noting that the post-earnings dip could present an attractive opportunity for long-term investors. Meanwhile, Mosesmann lowered his price target for AMD stock from $250 to $225, while still forecasting over 100% growth rate.
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What Concerns Investors in AMD’s Latest Results?
AMD stock dropped over 6% following Q4 2024 data center sales of $3.86 billion, which missed the $4.14 billion estimate, despite a strong 69% year-over-year growth. CEO Lisa Su’s projection of a 7% drop in Q1 2025 data center sales has also raised investor concerns. Moreover, the company’s uncertainty around AI chip revenue has raised doubts about its ability to take advantage of the rapidly growing AI market in the short term.
Nevertheless, management has provided Q1 2025 guidance with projected revenue ranging from $6.8 billion to $7.4 billion, compared to analysts’ estimate of $6.99 billion.
Mosesmann Remains Optimistic on AMD’s Future Growth
Mosesmann stays optimistic about the semiconductor giant, challenging the broader belief that AMD is losing momentum. In addition, Mosesmann expressed strong faith in Su’s leadership and believes that the negative sentiment around the company is exaggerated.
In his report, Mosesmann dismissed worries that custom ASICs (application-specific integrated circuits) are taking market share from GPUs (graphics processing units), stating that no one is quickly shifting from AMD and Nvidia (NVDA) to custom ASIC solutions this year. He also pointed out that custom ASICs have not gained a strong presence in the market.
Notably, ASICs are tailored for a specific task or application, while GPUs are designed for general-purpose parallel processing.
Furthermore, he expects AMD to secure double-digit market share in the data center GPU accelerated/AI compute unit segment over the next few years, with a total addressable market (TAM) of $500 billion.
Is AMD Stock a Good Buy Right Now?
Overall, several analysts maintained their bullish stance on AMD stock after its recent results. According to TipRanks, AMD stock holds a Moderate Buy consensus based on 21 Buys, 11 Holds, and one Sell rating. The average AMD share price target of $150.35 implies an upside of 34.23% from its current price.
