It’s a new year, but there’s nothing new under the sun at Advanced Micro Devices (NASDAQ:AMD). The stock has continued where 2023 left off – by piling on the gains. A month into 2024, the shares have risen by another 20%. With the chip giant about to report Q4 earnings on Tuesday (January 30th), after the market closes, can AMD keep the momentum going?
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There’s some more juice to be squeezed here, appears to be the take of Stifel’s Ruben Roy, a 5-star analyst rated in the top 2% of the Street’s stock pros. Ahead of the print, Roy has raised his price target from the prior $170 to $200, implying shares will add another 14% over the coming months. Roy’s rating remains a Buy. (To watch Roy’s track record, click here)
Roy is expecting an in-line quarter, calling for revenue of $6.1 billion (the same as the midpoint of the guide), amounting to a 9.0% year-over-year increase and 5.2% sequential uptick. Consensus has $6.13 billion.
However, while Roy previously expected more from the outlook, he has now tempered expectations and is more aligned with the Street regarding the March quarter. Roy now sees Q1 revenues at $5.7 billion, representing a 6.5% increase on the same period a year ago, yet falling by 6.6% on a quarter-over-quarter basis, roughly the same as consensus. The primary reason for this change is his belief that his previous Embedded assumptions were too aggressive.
“Data points across key Industrial and Communications end markets weakened throughout 4Q and we expect a similar scenario to play out in the near-term,” Roy explained. The segment, however, should be in recovery mode by the second half of the year.
On other hand, with all eyes on the opportunity within Data Center and updates on the MI300 series accelerators, the latest readout appears positive, with recent industry data points indicating “growing momentum” for AMD’s MI300-based platforms. And that bodes well for the future as AMD tries to close the gap on the current segment leader.
“With the overall AI data center TAM continuing to accelerate,” says Roy, “we continue to view AMD as well positioned to benefit as a diverse group of end customers continue to search out alternatives to NVDA.”
While Roy’s guide for the MI300 in 2024 stands at roughly $2 billion, as 2024 progresses, the prospect of improving supply, paired with “strong ongoing demand,” could lead to “meaningful upside.”
The rest of the Street’s take here offers something of a conundrum; on the one hand, based on 28 Buys vs. 8 Holds, the stock claims a Strong Buy consensus rating. However, some analysts seem to believe that the shares have risen too steeply. Consequently, the $159.47 average target implies that the stock will decline by 10% over the next year. It will be interesting to see whether the analysts adjust their price targets following tomorrow’s earnings report. (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.
