On Monday, Cantor Fitzgerald maintained an Overweight rating and $180.00 price target on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD). The firm anticipates significant announcements at AMD's upcoming Advancing AI Event scheduled for Thursday, October 10, in San Francisco. The event is expected to showcase new product launches, including data center CPUs, accelerators, and AI PCs, and discuss advancements in the company's ROCm software ecosystem.
At last year's Advancing AI event, AMD introduced its Instinct MI300 series GPU/APU platform and discussed AI PCs and advances with its ROCm software stack. The company also outlined its $400B+ AI total addressable market (TAM) projection for 2027, a significant increase from the $150B+ forecasted previously. This year, the focus may also include an updated AI TAM forecast, potentially extending towards 2028-2030.
AMD is expected to continue gaining market share in both CPU and GPU data center sectors with its AI-driven portfolio. Cantor Fitzgerald highlighted the importance of AMD demonstrating a vision for market share growth to 10% or more, which they believe will result in positive market reception for the company's stock. Following the previous year's event, AMD's stock experienced a 10% increase the next day and closed the year with a 26% gain.
The firm suggests that for AMD to outperform market expectations, it will need to instill greater investor confidence in its technology roadmap, particularly in securing inference design wins with a broader customer base. Rumors of potential presentations by Amazon (NASDAQ:AMZN) and/or Google are seen as positive indicators. Cantor Fitzgerald also noted that any evidence supporting AI GPU revenue growth to $12 billion or more by calendar year 2025 would substantiate earnings power of $6 or more per share, potentially driving the stock price close to $200.
In other recent news, Advanced Micro Devices (AMD) and Oracle (NYSE:ORCL) Cloud Infrastructure (OCI) have teamed up to power OCI's new AI supercluster with AMD's Instinct MI300X accelerators. This partnership aims to handle complex AI workloads and has already been adopted by Fireworks AI to scale its services. Additionally, Micron Technology (NASDAQ:MU) has forecasted higher-than-expected first-quarter revenue, signaling a surge in demand for memory chips used in AI computing.
In a significant event, AMD has announced Advancing AI 2024, scheduled for October 10, 2024, to reveal its latest AMD Instinct accelerators and 5th Gen AMD EPYC server processors. This event is expected to highlight AMD's expanding artificial intelligence (AI) solutions ecosystem.
Recent developments also include a Federal Reserve announcement of a half a percentage point cut to support the world's largest economy. Following this, growth stocks saw substantial advances, with tech giants such as Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), and Alphabet (NASDAQ:GOOGL) each rising over 1.5%.
Goldman Sachs has maintained its Buy rating on shares of AMD, reflecting the firm's confidence in AMD's strategic initiatives and market position. AMD's Q2 revenues reached $5.835 billion, surpassing Street consensus by $110 million, with its data center segment showing a record revenue growth of 115% to $2.8 billion.
InvestingPro Insights
As AMD prepares for its Advancing AI Event, recent data from InvestingPro sheds light on the company's financial position and market performance. AMD's market capitalization stands at an impressive $276.6 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 8.88% in Q2 2024 compared to the previous quarter.
InvestingPro Tips highlight AMD's strong market position and recent performance. The company is described as a "Prominent player in the Semiconductors & Semiconductor Equipment industry" and has shown a "High return over the last year," with a one-year price total return of 59.36% as of the latest data. This aligns with Cantor Fitzgerald's positive outlook and the potential for further growth following the upcoming AI event.
It's worth noting that AMD is "Trading at a high earnings multiple," with a P/E ratio of 203.13. This high valuation suggests that investors have high expectations for the company's future growth, particularly in the AI sector. The upcoming event could be crucial in justifying this valuation and potentially driving the stock price closer to the $200 mark, as suggested by Cantor Fitzgerald.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for AMD, providing a deeper understanding of the company's financial health and market position.
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