While shares of Advanced Micro Devices (NASDAQ:AMD) have retreated by ~25% from the early summer yearly highs, that can’t detract from what has still been an excellent year for the stock. To wit, even after the pullback, investors have collected returns of 50% since the start of 2023.
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With the chip giant about to report Q3 earnings today after the close, can the print provide a catalyst for reignition?
That remains to be seen, although according to Rosenblatt Securities’ analyst Hans Mosesmann, the Street might be underestimating what potentially lies ahead.
“We expect AMD to deliver in-line 3Q23 earnings results on mixed end market trends with stronger data center and PC CPU dynamics, offset by weaker enterprise, embedded, and PC gaming,” said the 5-star analyst, before adding, “We see a stronger 4Q23 outlook above consensus expectations as data center CPU share gains continue to accelerate (amid inventory normalization), a return to gaming seasonality which offset embedded weakness and console weak seasonality.”
For the quarter, Mosesmann is calling for revenues of $5.7 billion, in-line with Street expectations and at the midpoint of the guide. On the bottom line, though, the analyst thinks consensus is a bit optimistic, forecasting adj. EPS of $0.57 against Wall Street’s $0.68 estimate.
But it’s for the December quarter outlook that Mosesmann shows his bullish hand; for Q4, he is estimating revenue of $6.8 billion, higher than the analysts’ estimate of $6.389 billion. Likewise, at the other end of the scale, he sees adj. EPS of $1.07, while the Street has that figure at $0.89.
Digging into the details, Mosesmann expects AMD to “strike a bullish posture in all strategic product areas.” This includes the new MI300A/X APU/GPU compute accelerators, which Mosesmann says are “much more competitive than the Street believes.”
Furthermore, the MI300A is currently undergoing installation into the El Capitan supercomputer at the LLNL (Lawrence Livermore National Laboratory), while the MI300X (sampling) will be scaled up for mass production in the discrete GPU accelerator category in early 2024, competing with Nvidia’s Hopper GPU and Intel’s Gaudi 2/3.
All told, with AMD being one of Mosesmann’s “top conviction ideas,” the top analyst rates the stock a Buy along with a Street-high $200 price target. That figure suggests shares will more than double in the year ahead. (Watch Mosesmann’s track record)
Overall, the bulls are out in heavy attendance for AMD. Barring 7 Hold ratings, all 22 other analysts who published a review over the last 3 months, recommend the stock as a Buy. With an average price target of $136.18, the analysts foresee further upside of ~42% in the months ahead. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
