AMD stock has its longest rally in 21 years. Analysts talk about "irreplaceable assets"

Shares of processor manufacturer Advanced Micro Devices on Thursday, April 16, reached the longest series of growth since 2005. The dynamics of the securities coincided with that of the Nasdaq Composite index, which has also increased for 12 consecutive sessions. Analysts, however, warn that part of AMD's success is due to concessions to large customers.

Shares of Advanced Micro Devices grew by 7.8% at the end of trading on April 16 - up to $278.3. The securities set a new record of value. Moreover, the quotes have been growing for 12 consecutive sessions: this has not happened since 2005, reported MarketWatch with reference to Dow Jones Market Data. Over the past 12 months, the shares rose in price by 218%, and since the beginning of the year - by 30%.

The rally is supported by the general optimism in the market, covering also the technological sector, reflecting investors' hopes for the imminent end of the war in the Middle East, notes Marketwatch. But the securities also have a specific driver. If earlier investors perceived AMD as a lagging competitor to Nvidia in the market of graphics processors, now their focus is shifting to central processing units, the importance of which is growing along with the development of AI-agents, the publication says.

Central processing units for servers have come to be seen as "irreplaceable assets," TD Cowen analyst Joshua Buchalter wrote last week, as quoted by MarketWatch. On April 16, Bernstein analysts raised their target price on AMD stock from $235 to $265, Barron's reported. The new target, however, assumes a 5% drop in quotes.

"Our attitude toward AMD is warming to the extent that the company benefits from strong demand for server processors," Bernstein noted in a statement from Barron's. That said, AMD "has yet to prove its ability to close a major AI deal without handing over a significant share of the business in exchange," the analysts said. Concerns are related, among other things, to the deal with Meta in February, in which Zuckerberg's company received warrants for AMD securities - up to 160 million shares. That equates to about 10% of the business, Barron's wrote.

Citigroup analysts in early April, on the contrary, lowered the target price of AMD shares - from $260 to $248. Citi maintains a neutral rating for the securities, which means a recommendation to hold.

Most analysts, however, advise buying AMD stock: it has 44 Buy and Overweight ratings versus 12 Hold (advice to hold), MarketWatch shows. There are no sell recommendations.

This article was AI-translated and verified by a human editor