2023 was all about tech as the NASDAQ index, predominantly composed of tech stocks, saw out the year recording gains of an impressive 43%. However, those returns were light compared to the semiconductor segment’s performance. The SOX index – the main chip index – appreciated by 65%, bouncing back strongly from the prior year’s 38% drop.
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That said, the strong gains were not spread evenly with some laggards offsetting some of the big winners. The common theme amongst the outperformers was a heavy involvement in the year’s biggest trend – AI.
One of those being Advanced Micro Devices (NASDAQ:AMD), with the stock delivering returns of 128%. Over the years, AMD has become a credible rival to CPU leader Intel, and while Nvidia is currently regarded as the AI chip frontrunner, AMD is often seen as its main challenger in the space.
So, is there potential for another strong display in 2024? After including AMD on his list of best ideas for 2023, Stifel analyst Tore Svanberg thinks the company is set up well for 2024.
“We expect AMD’s current momentum in data center, enterprise and with tier-1 PC OEMs to continue as the company remains on a rapid cadence of new product introductions and competitor INTC is at the beginning of a multi-year transition phase,” the 5-star analyst said. “Despite near-term demand volatility, we expect share gains to drive growth well above market, and we expect gross and operating margin expansion to continue as accelerated top-line growth resumes, which ultimately, should drive multiple expansion, in our view.”
Additionally, with the growing need for AI Servers, from an accelerator perspective, both AMD and Intel could benefit. However, given AMD’s MI300 series’ hardware performance metrics seem closer to Nvidia than Intel’s Gaudi, Svanberg thinks the impact will be “more meaningful” for AMD (although Intel has yet to divulge much info regarding its upcoming 5nm Gaudi 3 accelerator).
All told, Svanberg reiterated a Buy rating on AMD shares and raised his price target from $145 to $170, implying the stock will post growth of 26% in the year ahead. (To watch Svanberg’s track record, click here)
Most analysts agree with Svanberg’s thesis. While 8 analysts remain on the sidelines, 25 others join him in the bull camp, providing the stock with a Strong Buy consensus rating. (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.
