It’s that time of year again, and Wall Street is gearing up for the next batch of quarterly reports. With AI being the market’s biggest theme right now, Advanced Micro Devices’ (NASDAQ:AMD) upcoming Q2 results are sure to draw plenty of interest.
AMD is seen as a company that can give Nvidia a run for its money in the AI chip game. However, Oppenheimer’s Rick Schafer, an analyst ranked in the 3rd spot amongst the thousands of Wall Street stock experts, believes that while expectations will likely be met, there won’t be any major positive surprises.
“We see in-line 2Q results and 3Q outlook,” said the 5-star analyst. “Upside seems limited as DC (data center)/client growth offset by weak gaming/embedded.”
Schafer expects the DC business, which accounts for 43% of AMD’s revenue, to show a 19% sequential increase and a significant 111% year-over-year improvement, driven by MI300 and server CPU share gains. Looking ahead, the MI325 AI chip will be available in Q4, followed by the MI350 in 2025, and the MI400 in 2026.
However, this growth is expected to be countered by a declining gaming segment, which represents 17% of revenue. Schafer predicts a 34% quarter-over-quarter decrease and a 61% drop compared to the same period last year. He also expects the semi-custom segment to remain a “drag through 2027.” The embedded business, making up 16% of revenue, is expected to stay flat sequentially but show a 42% year-over-year drop, with modest improvement anticipated in the second half of the year.
As for the opportunity to close the gap on segment leader Nvidia, Schafer is not all that confident and sees other challenges appearing from elsewhere. “We see an uphill battle for MI300 AI share gains vs. NVDA’s dominant accelerator lineup, CUDA software ecosystem, and GB200 rack systems,” the analyst says. “INTC/ ARM competition and 25% exposure to ex-growth PC market are headwinds for the core CPU franchise.”
Given these factors, Schafer remains neutral on AMD shares with a Perform rating and no fixed price target in mind. (To watch Schafer’s track record, click here)
Other analysts do have targets, and the average on the Street stands at $191.57, suggesting modest growth of 5.5% lies ahead for the coming months. On the ratings front, a more bullish picture emerges; based on 29 Buys vs. 7 Holds, the analyst consensus rates AMD stock as a Strong Buy. (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.
