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AMD stock is up 77% this year.
Qilai Shen/Bloomberg
Cowen says investors should overlook any short-term softness in Advanced Micro Devices’s business and look ahead toward the chip maker’s growth prospects in the artificial intelligence semiconductor market.
On Tuesday, analyst Matthew Ramsay raised his price target for
AMD
stock (ticker: AMD) to $135 from $115. He reiterated his Outperform rating, too.
Shares of AMD advanced 2.9% to $114.58 on Wednesday.
“Near-term, we continue to see a decidedly mixed environment for AMD,” he wrote. “We believe investor focus post earnings will again turn longer-term to AMD’s strong Datacenter prospects, including a crystallizing AI strategy supported by stronger” products.
PC industry sales have been weak over the past few quarters. Worldwide shipments of PCs fell 13% in the June quarter from a year earlier, according to research firm IDC, which cited a soft macro environment and poor demand from both consumers and corporations. IDC also said technology budgets have shifted away from hardware devices following the pandemic. That’s not good news for AMD, which makes a large portion of its revenue from computer processor sales.
But AI may be a coming boon for AMD. The analyst expects AMD will have a multibillion-dollar opportunity for its new AI chips by 2025. He predicts AMD’s business to improve later this year with stronger performance coming over the next two years.
“AMD is laying the groundwork for an increasingly impressive set of offerings against a larger AI TAM [total addressable market] where customers are clamoring for competition,” he wrote.
Nvidia
is the current market leader in chips used for AI applications.
AMD stock has risen about 50% over the past 12 months, versus the 46% rise in the
iShares Semiconductor exchange-traded fund
(SOXX), which tracks the performance of the ICE Semiconductor Index.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/amd-stock-price-ai-chips-5d261e92?siteid=yhoof2&yptr=yahoo