Several analysts have raised their target prices on AMD. Why are they expecting up to 45% growth?
Several analysts after a meeting with the management of Advanced Micro Devices (AMD) updated their targets on the company's shares and confirmed their recommendations to buy them. Wells Fargo raised its target price from $300 to $345, implying a potential upside of more than 45%. Evercore ISI raised its target price on AMD stock from $270 to $283. Its target implies a 19% upside for the stock. Mizuho raised its target from $275 to $285, seeing AMD stock price upside potential of almost 20%.
AMD shares soared more than 10% in trading on November 12. In total, they have added about 111% since the beginning of the year, outperforming the broad market several times over.
In total, out of 51 analysts covering AMD, only 12 are neutral, all others advise buying the stock (Buy and Outperform ratings).
What the analysts are saying
"We are positive on Ma's ability to continue to gain market share in server and PC processors, strengthen its position in the data center graphics processor segment, demonstrate operating margin growth and ultimately achieve earnings in excess of $10 per share by 2027," Wells Fargo analyst Aaron Rakers said. He is quoted by CNBC. For the third quarter , adjusted earnings totaled $1.2 per share. Analysts had forecast $1.17, according to data compiled by Bloomberg.
AMD presented a "compelling and stronger than expected financial model" at its Analyst Day, he said. The company, he said, outlined "a path to earnings of more than $20 per share by 2030, based on average annual revenue growth above 35%, with the data center segment growing at more than 60% per year."
However, Wells Fargo also cited risks to the optimistic outlook, including potential challenges to the technology roadmap, risks associated with key executives, increased competition, rising investor expectations and improved performance from the company's main rivals.
As reported by the company
At a meeting with analysts, AMD CEO Lisa Su predicted average annual revenue growth of about 35% over the next three to five years. She cited the "insatiable" demand for chips for artificial intelligence as the main driver of growth, CNBC reports. AMD's artificial intelligence data center chip business will grow about 80% per year over the same period and will reach billion-dollar sales by 2027, according to Lisa Su.
It also expects AMD to capture a double-digit market share (more than 10%) of the data center AI chip market over the next three to five years. By 2030, the company predicts that AI-enabled data center revenues will reach $1 trillion per year.
This article was AI-translated and verified by a human editor
