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On Wednesday, JPMorgan reiterated its Neutral rating on Advanced Micro Devices, Inc. (NASDAQ:AMD), with a set price target of $130.00. According to InvestingPro data, AMD currently trades at $96.76, with a price-to-earnings ratio of 96.18, indicating a relatively high earnings multiple. The stock has experienced significant volatility, falling about 36% over the past six months. The firm’s analyst highlighted AMD’s confidence in achieving strong growth, projecting a double-digit percentage increase, likely over 20% for calendar year 2025 (CY25). This optimism is based on a variety of growth drivers, including continued market share gains in server central processing units (CPUs), with significant traction among cloud and hyperscaler clients, as well as in the enterprise sector. AMD is also expected to see further gains in the desktop and notebook CPU markets, bolstered by improving demand trends.
The semiconductor company is also anticipated to grow its more cyclical businesses, such as gaming and embedded systems. Additionally, AMD’s artificial intelligence (AI) graphics processing unit (GPU) business is projected to grow over 60% this year, according to JPMorgan’s estimates. This growth potential is supported by AMD’s strong financial foundation, with InvestingPro data showing annual revenue of $25.79 billion and a healthy current ratio of 2.62, indicating robust liquidity. The confidence in growth is partly due to the upcoming second-half ramp-up of AMD’s next-generation MI350 accelerator platform. Early success for this platform was signaled by Oracle (NYSE:ORCL)’s recent announcement on Monday that it placed a multi-billion-dollar order, including an initial batch of 30,000 MI355x next-generation GPUs, to build a cluster aimed at both training and inferencing workloads.
JPMorgan’s analysis suggests that AMD is actively working to transition its existing customer base, which includes industry giants like Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), and Oracle, as well as new customers among Tier-1 cloud and hyperscalers, to its MI350 platform. This transition is expected to occur mid-year, ahead of the launch of its rack-scale, next-generation MI400 platform in CY26.
The key takeaway from JPMorgan’s perspective is AMD’s robust and diverse data center, enterprise, and client compute portfolio, which is poised to drive significant growth in CY25. This growth is seen as a combination of market share gains, improving demand and cyclical trends, and the growing momentum behind AMD’s next-generation AI compute solutions. For deeper insights into AMD’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 18 additional ProTips and detailed financial health scores that help evaluate the company’s long-term potential.
In other recent news, Broadcom (NASDAQ:AVGO) reported impressive first-quarter earnings, with adjusted earnings per share of $1.60, surpassing the average analyst estimate of $1.50. The company’s adjusted net revenue reached $14.92 billion, exceeding the expected $14.61 billion, and it forecasts second-quarter revenue of approximately $14.9 billion. Meanwhile, Advanced Micro Devices (AMD) announced the launch of its Radeon RX 9070 Series GPUs, promising significant performance improvements over previous models. In addition, AMD is reportedly in discussions to sell its data center manufacturing plants, valued between $3 billion and $4 billion, to several interested Taiwanese firms.
Furthermore, AMD disclosed the approval of performance bonuses for its top executives, including a $1,776,120 bonus for CEO Lisa T. Su, reflecting the company’s 2024 performance. Vultr, a global cloud infrastructure provider, has integrated AMD’s latest Instinct MI325X GPUs into its Chicago data center, enhancing its AI processing capabilities. This collaboration marks Vultr as the first cloud provider to offer these advanced GPUs, aiming to improve AI application development and scalability. These developments underscore AMD’s ongoing efforts to innovate and expand its market presence in the technology sector.
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