Advanced Micro Devices (NASDAQ:AMD) shares have had a year of mixed fortunes. What began as an extension of the big gains delivered in 2023, the mood around the chipmaker has progressively soured, with shares falling about 27% in the last 4 months.
Essentially, while the company has been considered one that might be able to give Nvidia a run for its money in the AI chip game, doubts have emerged around its potential to pose a serious challenge.
Susquehanna’s Christopher Rolland, a 5-star analyst rated in the top 1% of the Street’s stock pros, highlighted that while AMD did increase its 2024 revenue guidance for the MI300 accelerator from over $3.5 billion to over $4 billion, the $500 million raise was widely expected by investors, who were likely hoping for a more significant boost.
Looking ahead, AMD management expects to increase the supply of the MI300 throughout the year, with a focus on ramping up in the latter half. They believe they have a clear path to significantly exceed $4 billion in supply levels. Rolland shares this optimism, predicting further revenue increases and estimating that MI300 sales could reach approximately $5 billion in 2024.
Rolland’s comments come ahead of AMD’s 2Q24 earnings release on Tuesday, July 30. The top analyst expects the company to report revenue of $5.72 billion and a Non-GAAP EPS of $0.68, with the key focus remaining on the MI300’s outlook.
However, Rolland also highlights a growing risk, noting that some market observers are concerned about cancellations of MI300 orders from major clients like Microsoft and Alibaba, possibly due to better performance from Nvidia’s new GB200 platform and issues with AMD’s internal high-bandwidth memory (HBM) qualification. Rolland concludes that the “assumption of additional upside to the 2024 guidance has been increasingly scrutinized by the buyside.”
All told, Rolland rates AMD shares a Positive (i.e., Buy), while his $200 price target implies the stock will surge 42% in the year ahead. (To watch Rolland’s track record, click here)
Most on the Street agree with that stance. Based on a mix of 30 Buys vs. 6 Holds, the analyst consensus rates the stock a Strong Buy. Over the next 12 months, shares are expected to appreciate by 39.5%, considering the average price target stands at $195.03. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
