AMD stock holds at $111 as Truist Securities weighs datacenter GPU debate

Investing.com - Truist Securities maintained its Hold rating and $111.00 price target on Advanced Micro Devices (NASDAQ:AMD), currently trading at a notably high P/E ratio of 100.76, as questions persist about the company’s datacenter GPU momentum. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, despite 11 analysts recently revising their earnings expectations downward.

The firm highlighted ongoing industry debate regarding AMD’s datacenter GPU business, noting the question isn’t about AMD’s ability to deliver products and grow revenue (which stands at an impressive 21.71% year-over-year), but rather customer motivations behind these purchases.

Truist Securities suggested some customers may be buying AMD’s GPUs primarily to "stimulate competition and price-check" Nvidia (NASDAQ:NVDA), rather than because they genuinely prefer AMD’s technology over competitors.

The firm addressed a mid-quarter controversy regarding whether AMD’s next-generation datacenter GPUs would be used at Amazon (NASDAQ:AMZN) Web Services (AWS), explaining that the appearance and disappearance of certain customer logos from AMD’s materials likely reflects customers’ preferences to announce supplier relationships at their own events.

Truist Securities identified AMD’s upcoming Q2 earnings, scheduled for August 5, as the next significant catalyst for the stock, while also noting industry contacts have observed "a significant inventory build in the channel" that analysts found difficult to explain. Get deeper insights into AMD’s financial health and growth prospects with InvestingPro, which offers 15+ additional exclusive tips and comprehensive analysis.

In other recent news, Advanced Micro Devices (AMD) has been the focus of several updates from analysts and industry developments. Mizuho (NYSE:MFG) raised its price target for AMD to $152, citing strong demand for AI accelerators, while maintaining an Outperform rating. The firm adjusted its revenue estimate for the June quarter to $7.40 billion, aligning with consensus, and projected earnings per share slightly lower than consensus at $0.47. Melius Research upgraded AMD from Hold to Buy, setting a new price target of $211, driven by growth prospects in the graphics processing unit market. Piper Sandler also increased its price target to $140, highlighting enthusiasm for AMD’s recent product launches, including the Helios rack. Meanwhile, TD Cowen reiterated its Buy rating and $115 price target, recognizing AMD’s progress in the AI market following its Advance AI event.

In industry collaboration, AMD announced a strategic partnership with Microsoft (NASDAQ:MSFT)’s Xbox division to develop silicon technology for future Xbox consoles. This multi-year collaboration aims to enhance gaming technology with improved graphics and AI-powered experiences. The partnership continues AMD’s role in providing chips for existing Xbox systems, although specific release timelines for new hardware were not disclosed. These developments reflect AMD’s ongoing efforts to strengthen its position in the competitive semiconductor and AI markets.

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