Piper Sandler has shown continued confidence in AMD (NASDAQ: AMD), raising the chipmaker's price target to $200 from $175 while maintaining an Overweight rating.
The firm's optimism follows AMD's recent Advancing AI 2024 event, which showcased the company's data center and GPU advancements, including the launch of the MI325 GPU and the Turin CPU.
During the event, AMD updated its AI accelerator total addressable market (TAM) forecast, projecting it to reach $500 billion by 2028, an increase from the previous estimate of $400 billion by 2027. This revision underlines AMD's potential to capture a significant market share in the AI accelerator space.
Despite the positive developments, AMD's management did not provide an updated revenue forecast for 2024 GPU revenues, which are currently anticipated to exceed $4.5 billion. Piper Sandler anticipates that AMD may present revised revenue expectations in the upcoming Q3 earnings report.
In other recent news, Advanced Micro Devices (NASDAQ:AMD) continues to make significant strides in the artificial intelligence (AI) and high-performance computing sector. The company's Q2 revenues surpassed Street consensus, reaching $5.835 billion, with its data center segment showing record revenue growth of 115% to $2.8 billion. AMD recently launched its 5th Gen AMD EPYC server CPUs, AMD Instinct MI325X accelerators, and third-generation Ryzen AI PRO 300 Series mobile processors, all aimed at boosting AI performance.
Analysts from Northland, Cantor Fitzgerald, and Stifel have reiterated their respective Outperform, Overweight, and Buy ratings on AMD, reflecting confidence in the company's strategic initiatives and market position. Truist Securities maintained its Hold rating on AMD, setting a price target of $156.
AMD's strategic collaboration with Oracle (NYSE:ORCL) Cloud Infrastructure, powering its new AI supercluster with AMD's Instinct MI300X accelerators, further highlights the company's expanding presence in the cloud computing sector. In addition, AMD has unveiled networking components, the AMD Pensando Salina DPU and Pollara 400 NIC (NASDAQ:EGOV), expected to be available in the first half of 2025. These components aim to optimize front-end network clusters and enhance back-end network performance.
InvestingPro Insights
AMD's recent developments in AI and data center technologies align well with its current market position and financial performance. According to InvestingPro data, AMD boasts a substantial market capitalization of $265.72 billion, reflecting investor confidence in its growth potential. The company's revenue for the last twelve months stands at $23.28 billion, with a notable revenue growth of 6.4% over the same period.
InvestingPro Tips highlight AMD as a "Prominent player in the Semiconductors & Semiconductor Equipment industry," which is consistent with Piper Sandler's bullish outlook on the company's position in the data center market. Additionally, the tip indicating that "Net income is expected to grow this year" supports the positive sentiment surrounding AMD's future performance, especially in light of its expanding AI accelerator market projections.
It's worth noting that AMD is "Trading at a high earnings multiple," with a P/E ratio of 195.92. This high valuation suggests that investors are pricing in significant future growth, which aligns with the company's ambitious AI market forecasts and technological advancements.
For readers interested in a more comprehensive analysis, InvestingPro offers 14 additional tips for AMD, providing a deeper understanding of the company's financial health and market position.
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