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On Wednesday, KeyBanc Capital Markets sustained its Sector Weight rating on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), a prominent player in the semiconductor industry with a market capitalization of $159.4 billion. According to InvestingPro data, AMD trades at a P/E ratio of 98.38, reflecting high growth expectations. The decision follows the company’s announcement of robust first-quarter results and second-quarter guidance that surpassed market expectations. AMD’s performance was notably strong in the Client segment, especially Desktop PCs, and Gaming, where console inventory levels have returned to normal.
Despite concerns over the impact of the China AI chip ban, which is projected to reduce AMD’s revenue by approximately $1.5 billion in 2025, with an anticipated $700 million effect in the second quarter, the company’s immediate financial outcomes were positive. The ban’s influence did not dampen the better-than-expected results for the initial two quarters. AMD’s current annual revenue stands at $25.79 billion, with a healthy gross profit margin of 53%. InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model.
AMD’s management reaffirmed the mid-year ramp-up of the MI355 and anticipates that MI GPUs will resume year-over-year growth in the third quarter. Moreover, they expect a solid double-digit percentage growth in 2025. These projections have led KeyBanc analysts to increase their estimates for AMD, although they have decided to maintain the Sector Weight rating.
The second half of the year is expected to see PC and Gaming sectors performing below their usual seasonal patterns, according to AMD’s outlook. This forecast suggests a cautious view on these markets in the latter part of the year.
In summary, KeyBanc’s stance on AMD’s stock remains unchanged at Sector Weight, despite the company’s strong start to the year and the positive adjustments to projections based on current performance and future growth expectations in the Gaming and PC markets. With an overall "GOOD" financial health score from InvestingPro and 12 additional ProTips available for subscribers, investors can access comprehensive analysis through the platform’s detailed Pro Research Report, which provides deeper insights into AMD’s valuation and growth prospects.
In other recent news, Advanced Micro Devices Inc. (AMD) reported its first quarter of 2025 financial results, showing strong performance with revenue reaching $7.4 billion, surpassing the forecast of $7.11 billion. Earnings per share (EPS) were $0.96, slightly above expectations. Gross margin improved to 54%, and the company anticipates strong double-digit revenue growth for the year. Jefferies maintained a Hold rating on AMD, lowering the price target to $100 due to concerns about AI growth prospects, while Bernstein upheld a Market Perform rating with a $95 price target, noting robust client and gaming revenue. Despite challenges in China’s AI sector, AMD’s datacenter GPU segment needs significant growth to meet financial projections. The company’s operating expenses have risen, affecting financial leverage, and export controls in China are expected to impact future revenues. Analyst firms, including Jefferies and Bernstein, have expressed caution, highlighting AMD’s dependency on its AI narrative for potential stock upside.
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