On Tuesday, Northland reaffirmed its positive stance on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), maintaining an Outperform rating and a price target of $175.00. The firm's outlook is based on the expectation of a surge in PC demand by 2025, influenced by Microsoft (NASDAQ:MSFT)'s decision to end support for Windows 10. Northland anticipates that a significant number of the estimated 1.2 billion systems running Windows 10 will transition to Windows 11.
The analyst predicts that around 326 million PCs will be too outdated to support the new operating system, necessitating upgrades. This forecast contradicts the current consensus, which suggests a modest 5% growth in PC client revenue.
Northland, however, projects potential growth ranging from 15% to 25%. The firm's analysis assumes that the market shares of x86 processors and competitors Intel Corporation (NASDAQ:INTC) and AMD will remain stable.
Northland estimates that the shift to Windows 11 could contribute an additional $4.5 billion to $7.5 billion to Intel's revenue and between $1.0 billion to $1.7 billion to AMD's revenue in the calendar year 2025. The firm's projection is based on the significant number of systems that will require upgrading to the new operating system.
The outlook for AMD remains strong according to Northland, as the company is poised to benefit from the impending upgrade cycle prompted by the end of Windows 10 support. This anticipated increase in demand is expected to have a substantial impact on AMD's financial performance in the coming years.
In other recent news, Advanced Micro Devices (AMD) has announced the appointment of Mr. Philip Carter as its new Corporate Vice President and Chief Accounting Officer, succeeding Ms. Darla Smith. This change in management comes alongside AMD's significant strides in high-performance computing, notably powering the world's fastest supercomputer, El Capitan.
The company has also expanded its Versal Gen 2 portfolio with the Versal Premium Series Gen 2, aiming to enhance system acceleration across various sectors.
Recent developments include Citi expressing a positive outlook on the U.S. semiconductor sector, recommending investors to accumulate positions in semiconductor stocks, including AMD. Bank of America's analysis of third-quarter CPU trends indicated AMD's significant market share gains over Intel Corporation.
However, Taiwan Semiconductor Manufacturing Co has been directed by the U.S. government to halt shipments of advanced chips to Chinese customers following a potential breach of export controls. Despite these challenges, AMD continues to demonstrate strong performance in the market.
InvestingPro Insights
To complement Northland's optimistic outlook on Advanced Micro Devices, Inc. (AMD), recent data from InvestingPro provides additional context for investors. AMD's market capitalization stands at an impressive $225.46 billion, reflecting its significant position in the semiconductor industry. The company's revenue for the last twelve months as of Q3 2024 reached $24.3 billion, with a notable quarterly revenue growth of 17.57% in Q3 2024, indicating strong momentum that aligns with Northland's positive projections.
InvestingPro Tips highlight that AMD's net income is expected to grow this year, which could be further bolstered by the anticipated surge in PC demand. Moreover, AMD is trading at a low P/E ratio relative to its near-term earnings growth, suggesting potential upside for investors if the company meets or exceeds growth expectations.
It's worth noting that InvestingPro offers 16 additional tips for AMD, providing a more comprehensive analysis for investors interested in deeper insights. These tips cover various aspects of AMD's financial health and market position, which could be particularly valuable in light of the expected Windows 11 upgrade cycle.
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