Advanced Micro Devices (NASDAQ:AMD) investors have had little to cheer about, as the stock has failed to capitalize on the AI-driven boom that has propelled other chipmakers forward. Instead of riding the wave, AMD shares have tumbled – down 50% over the past year – now hovering just above their 52-week lows.
But if there’s one thing CEO Lisa Su knows how to do, it’s orchestrating a turnaround. A decade ago, she pulled AMD back from the edge of bankruptcy and led it to remarkable success. Now, investors are eager to see if she can work her magic once again.
J.P. Morgan analyst Harlan Sur, who ranks in the top 1% of Street stock experts, set out to find answers. After meeting with Su, he came away noting the company’s confident tone.
“Overall, the key message is that the team’s strong and diversified data center/enterprise/client compute portfolio will drive strong growth in CY25 – combination of share gains, improving demand/cyclical trends, and growing momentum for its next-gen AI compute solutions,” said the 5-star analyst.
The company expects to achieve “strong double-digit growth” (Sur thinks over 20%) and even higher earnings growth in 2025, driven by several factors. These include increasing market share in server CPUs, especially among cloud providers and hyperscalers, along with benefitting from “improving server demand trends.” AMD also expects to add more share in desktop and notebook CPUs while its gaming and embedded businesses should grow too. Additionally, its AI GPU segment should expand, with Sur expecting over 60% growth this year.
Meanwhile, the company is preparing for a strong second half of the year, as it readies to launch its next-gen MI350 accelerator. Early momentum is already evident, as Oracle recently placed a multi-billion dollar order, including an initial batch of 30,000 MI355X GPUs, to build a computing cluster for AI training and inference. Sur also thinks the company is working to “transition existing customers” like Microsoft, Meta, and Oracle, as well as new major cloud providers, to the MI350 platform by mid-year. This transition will set the stage for its next-gen MI400 platform in 2026, which is expected to support large-scale AI clusters with over 100,000 GPUs each.
“Just as important,” Sur goes on to add, “the team’s networking strategy encompasses a scale-up/scale-out architecture that utilizes industry standard ethernet/PCIe/UALink/Ultra Ethernet physical layer mediums which is supported by a strong ecosystem of silicon, cabling, and systems partners.”
Yet, despite all these bullish developments, Sur isn’t fully convinced. He’s sticking with a Neutral rating on AMD shares, although he might as well have said Buy, considering his $130 price target factors in a 12-month gain of 32%. (To watch Sur’s track record, click here)
The rest of the Street leans more optimistic. While 11 analysts remain on the sidelines, 25 rate AMD a Buy, with only one Sell. The consensus? A Moderate Buy rating, with an average price target of $148.44 – implying a potential 47% gain from current levels. (See AMD stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.
Questions or Comments about the article? Write to editor@tipranks.com