Gold prices bounce off 3-week lows; demand likely longer term
On Monday, Northland reaffirmed its positive outlook on AMD stock (NASDAQ:AMD), maintaining an Outperform rating and a price target of $175.00. The semiconductor giant, currently valued at $188 billion, is showing strong fundamentals according to InvestingPro data, with a healthy current ratio of 2.5. The firm addressed misconceptions regarding AMD’s orders with TSMC, suggesting that AMD is likely shifting orders to OSAT due to TSMC’s CoWoS capacity limitations. Northland anticipates that the challenges AMD faced in the Embedded and Game segments will evolve into slight advantages in the calendar year 2025. With revenue growing at nearly 10% and analysts expecting continued profitability, the demand for AI and server products is expected to remain robust, with AMD poised to capture more market share. InvestingPro analysis reveals 13 additional key insights about AMD’s growth potential and market position.
According to Northland, AMD’s open-source approach has been validated by DeepSeek, countering any negative sentiment ahead of the company’s earnings report, which is scheduled for February 4th. With a gross profit margin of 52%, AMD maintains competitive pricing while delivering strong performance. The analyst also touched upon rumors concerning Microsoft (NASDAQ:MSFT)’s dissatisfaction with AMD, noting that the frustration may vary depending on who is consulted. Northland proposed that hyperscalers are more likely frustrated with NVIDIA (NASDAQ:NVDA) due to its high gross margins in data center products and its competitive stance against its own customers.
AMD’s open-source software has been less developed compared to NVIDIA’s Cuda, yet the success of DeepSeek underscores the potential of open-source models. Trading at a P/E ratio of 102, AMD’s valuation reflects high growth expectations. Northland emphasized that Cloud Service Providers (CSPs) are interested in long-term product roadmaps, and AMD has demonstrated its capability to challenge and succeed against established competitors in the server market. For a comprehensive analysis of AMD’s market position and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, KeyBanc Capital Markets revised its stance on NVIDIA and AMD, resulting in lowered estimates and price targets for both companies. NVIDIA’s revenue projections for its data center compute segment were reduced due to anticipated declines in demand for its Hopper GPUs and lower than expected contributions from Blackwell GPUs. Despite these challenges, KeyBanc maintains an Overweight rating on NVIDIA. AMD’s outlook was also impacted, with KeyBanc lowering its estimates and price target, though specifics were not provided. These changes come amid mixed findings in the semiconductor sector, with demand for AI remaining strong, but crosscurrents in GPUs and AI ASICs.
In other developments, AMD announced a strategic collaboration and a $20 million investment in Absci Corporation, with the aim of enhancing Absci’s AI-driven drug discovery capabilities. The partnership is expected to lead to significant reductions in infrastructure costs and faster innovation cycles.
Meanwhile, AMD received a downgrade from Goldman Sachs due to concerns over increased competition in accelerated computing and the potential impact of Arm-based custom CPUs. The downgrade resulted in a reduction of the price target from $175.00 to $129.00. Despite these developments, both Citi and HSBC analysts maintain a Buy rating on NVIDIA, citing the company’s dominant position in the artificial intelligence sector and significant growth in the gaming industry.
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