Gold prices bounce off 3-week lows; demand likely longer term
On Monday, Cantor Fitzgerald analyst C.J. Muse raised the price target on AMD (NASDAQ:AMD) to $140 from $120, while reaffirming an Overweight rating on the shares. According to InvestingPro data, analyst targets for AMD currently range from $95 to $200, with the company commanding a substantial market capitalization of $188.39 billion. The adjustment comes ahead of AMD’s Advancing AI 2025 Event, which is expected to be a pivotal moment for the company’s data-centric products, particularly in the artificial intelligence (AI) sector. The event will feature a keynote by AMD’s CEO Dr. Lisa Su and will include technical sessions aimed at developers, with a focus on the upcoming Instinct products like the MI350.
AMD is anticipated to pull forward the production of the MI350 to mid-2025 and provide updates on future products such as the MI400 series and beyond. The firm is also expected to share developments in its ROCm software stack and progress on rack-scale solutions following the completion of ZT Systems acquisition. Additionally, an update on the AI Total (EPA:TTEF) Addressable Market (TAM) is likely, with projections possibly extending to 2029 or 2030 and estimates nearing $600 billion.
The report suggests that 2025 may be a transitional year for AMD, with the market’s attention shifting to the company’s potential market share gains during the MI400 product cycle in the following year. The company’s strong momentum is evident in its impressive revenue growth of 21.71% over the last twelve months, with analysts forecasting 23% growth for the upcoming fiscal year. InvestingPro analysis reveals 17 additional key insights about AMD’s growth trajectory and market position. There is anticipation for new customer announcements and a vision for a comprehensive solution framework that includes both robust software and hardware. If AMD can provide commentary on new design wins for 2026 and a clear strategy, shares could start to outperform the broader semiconductor market.
Cantor Fitzgerald’s analysis indicates that the Advancing AI event may have a modestly positive impact on AMD’s share performance. However, they also note that after a significant increase since the April lows, the stock’s performance might experience a near-term pause. Current InvestingPro metrics show AMD trading at a P/E ratio of 85.14, while maintaining a strong financial health score of GOOD. The company’s stock has demonstrated considerable volatility, trading between $76.48 and $187.28 over the past 52 weeks. The firm maintains its Overweight rating and has increased the price target to $140, acknowledging that their current model, which predicts a 2026 earnings per share (EPS) of $5.30, may be conservative. A more reasonable EPS range of $5.50 to $5.75 is suggested, supporting a fair value closer to $140 based on a 25x multiple.
Looking further ahead, depending on AMD’s success in capturing market share, Cantor Fitzgerald sees potential for $25-50 billion in GPU Accelerator revenues, which could equate to an annual EPS exceeding $10, assuming a 5-10% market share of a $500 billion TAM. The company’s current gross profit margin stands at 53.58%, with a healthy current ratio of 2.8, indicating strong operational efficiency and financial stability. Based on comprehensive InvestingPro Fair Value analysis, AMD currently appears slightly undervalued, presenting a potential opportunity for investors interested in the semiconductor sector.
In other recent news, Advanced Micro Devices (AMD) has announced the sale of ZT Systems’ manufacturing operations to Sanmina for approximately $3 billion. This strategic divestiture allows AMD to focus on its core competencies, retaining the engineering team for $1.6 billion to enhance its competitive edge in the AI sector. Citi analysts have maintained a Neutral rating on AMD, with a price target of $100, following the announcement. Meanwhile, Wells Fargo (NYSE:WFC) reiterated an Overweight rating with a $120 price target, highlighting the strategic partnership with Sanmina as a preferred partner for new product introductions. Stifel analysts also maintained a Buy rating with a $132 target, emphasizing the potential of AMD’s AI infrastructure strategy.
Additionally, Citi raised its price target for AMD to $120 ahead of the company’s "Advancing AI" event, where new AI products are expected to be launched. This event is anticipated to shed light on AMD’s latest advancements in AI technology. Sanmina’s acquisition of ZT Systems is part of its plan to expand its presence in cloud and AI infrastructure manufacturing. The transaction is expected to close by the end of 2025, pending regulatory approvals. These developments highlight AMD’s strategic focus on strengthening its position in the AI and cloud sectors.
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