On Wednesday, Truist Securities sustained their Hold rating on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), with a steady price target of $156.00. The semiconductor company's third-quarter results were described as mixed, and its fourth-quarter outlook was slightly below market expectations. However, AMD's increased guidance for its Datacenter GPU revenue from $4.5 billion to $5 billion for the calendar year 2024 was noted as a positive aspect.
AMD's third-quarter performance showed a balance of strengths and weaknesses, leading to the cautious stance from Truist Securities. The firm acknowledged AMD's raised expectations for Datacenter GPU sales, indicating a confident stance in its growth potential within this segment. Despite this, Truist Securities expressed reservations due to two primary concerns.
Firstly, they believe AMD's position in the Artificial Intelligence (AI) domain may be limited when compared to NVIDIA Corporation's (NASDAQ:NVDA) offerings, which Truist rates as a Buy. Secondly, there is an anticipation of increased competition in the x86 processor market, which could put pressure on AMD.
The analyst from Truist Securities also maintained the earnings per share (EPS) estimate for the calendar year 2025 at $5.04. The price target of $156 is based on a 31 times multiple, which is consistent with previous valuations but represents a 2 times discount compared to the 33 times multiple assigned to AMD's Datacenter peers.
The implications of AMD's third-quarter results and fourth-quarter outlook reflect a market that is closely monitoring the company's performance in a competitive and rapidly evolving industry. With AMD's increased Datacenter GPU guidance providing a positive note, the company's strategic moves in the AI space and its response to emerging CPU competitors will be key areas of focus for investors and analysts moving forward.
In other recent news, Advanced Micro Devices (AMD) has been the subject of multiple analyst reports following robust quarterly results and updated guidance. AMD's revenue exceeded expectations, bolstered by strong sales of its MI300 products, market share gains from EPYC Turin processors, and increased Ryzen PC CPU demand.
The company's management has raised its 2024 MI300 guidance to over $5.0 billion, up from the previous forecast of more than $4.5 billion. Stifel maintained a Buy rating and a $200.00 price target for AMD, while Goldman Sachs reaffirmed a Buy rating with a $175 target. BofA Securities also held a Buy rating, projecting robust year-over-year EPS growth rates of 40% and 30% for calendar years 2025 and 2026. Deutsche Bank maintained a Hold rating, and Evercore ISI raised its price target to $198.
Citi and Barclays adjusted their outlook on AMD shares, reducing the price targets to $200 and $170 respectively. In other developments, OpenAI announced a collaboration with Broadcom (NASDAQ:AVGO) Inc. and Taiwan Semiconductor Manufacturing Company (TSMC) to create its inaugural in-house artificial intelligence chip, incorporating AMD chips to satisfy its growing infrastructure needs.
InvestingPro Insights
To complement the analysis provided by Truist Securities, recent data from InvestingPro offers additional context on AMD's financial position and market performance. AMD's market capitalization stands at an impressive $269.07 billion, reflecting its significant presence in the semiconductor industry. The company's revenue for the last twelve months as of Q2 2024 reached $23.28 billion, with a notable revenue growth of 6.4% over the same period.
InvestingPro Tips highlight AMD's strong market performance, with the stock showing a significant return of 72.85% over the past year. This aligns with the article's mention of AMD's positive outlook in certain segments, particularly the increased guidance for Datacenter GPU revenue. Additionally, AMD is noted as a prominent player in the Semiconductors & Semiconductor Equipment industry, which supports the article's focus on the company's competitive positioning.
It's worth noting that AMD's P/E ratio is currently at 198.13, indicating that the stock is trading at a high earnings multiple. This valuation metric could be a factor in Truist Securities' cautious Hold rating and their concerns about increased competition in the x86 processor market.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips on AMD, providing a deeper understanding of the company's financial health and market position.
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