It’s probably a bit of a stretch to call Advanced Micro Devices (NASDAQ:AMD) a polarizing name but nevertheless it is subject to differing opinions these days on its expected trajectory.
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The debate has been reflected in a muted share price performance. The stock is up by 5% year-to-date but that pales in comparison to segment leader Nvidia’s phenomenal 174% gains and to the industry’s main barometer, the SOX’s more modest 38% returns.
For Stifel analyst Ruben Roy, an analyst ranked amongst the top 3% of Wall Street stock experts, that display is indicative of the wide range of views regarding the chips giant’s prospects, although Roy comes down squarely on one side.
“We believe that sentiment on AMD shares is mixed with a wide range of assumptions for MI-series GPUs in 2025, concerns regarding the company’s competitive positioning in the AI-compute and PC end markets, as well as the potential for continued pressure on the mainstream x86 server market,” the 5-star analyst said. “Nevertheless, we continue to believe AMD is positioned to benefit from various medium-term growth drivers including (i) AI-infrastructure investment, (ii) continued x86 CPU share gains, and (iii) an AI-driven PC refresh cycle.”
As is so often the case, when the conversation turns to AMD’s prospects, Nvidia’s shadow looms large. Taking a lead from its bigger peer, at the recently held Computex 2024, AMD revised its Instinct accelerator roadmap, with the decision to introduce new products annually, similar to Nvidia’s approach.
The next accelerator, the MI325X, is expected to be available in Q4, featuring increased memory capacity (288GB HBM3e compared to the H200’s 141GB) and higher memory bandwidth (6TB/s versus the H200’s 4.8TB/s). That should be followed by the release of the MI350 series in 2025, which will incorporate CDNA 4 technology, and which is projected to deliver a 35x boost in AI inference performance, and is expected to go toe-to-toe against Nvidia’s B-Series platforms. In 2026, AMD anticipates launching the MI400 series, based on a new generation of CDNA architecture called ‘Next,’ which will compete with Nvidia’s newly announced R-Series platforms.
“While AMD believes that its accelerator technologies provide distinct advantages in inference applications, we believe that the company expects traction in inference and training workloads over time, particularly as MI350 and MI400 launch,” notes Roy.
Additionally, at Computex AMD also unveiled its new Ryzen AI 300 Series processors for notebooks and Ryzen 9000 Series processors for desktops, and during the keynote, the company highlighted its collaborations with several partners, including Microsoft, HP, Lenovo, and ASUS. Roy strikes a confident tone regarding the opportunity here. “We are incrementally bullish on an AI-PC refresh cycle as we look towards the latter end of 2024 and in 2025 as app development is accelerating,” he said on the matter.
Bottom line, Roy rates AMD shares a Buy, while his $200 price target factors in one-year returns of 29%. (To watch Roy’s track record, click here)
That target is above the Street’s average, which currently stands at $191.03 and represents 12-month returns of 23.5%. Most analysts also remain on AMD’s side, with the stock’s Strong Buy consensus rating based on a mix of 29 Buys vs. 7 Holds. (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.
