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On Wednesday, Raymond (NSE:RYMD) James made an adjustment to the price target for AMD stock, lowering it from $180 to $150, but retained an Outperform rating. Currently trading at $119.50, AMD sits near its 52-week low of $112.80, significantly below its high of $227.30. According to InvestingPro data, the company, valued at nearly $194 billion, appears slightly undervalued based on its Fair Value analysis. Srini Pajjuri, the analyst from Raymond James, provided insights into the company’s recent financial outcomes and future projections. AMD’s fourth-quarter results for 2024 and first-quarter revenue forecast for 2025 surpassed consensus expectations, primarily due to performance in the PC segment. With a robust revenue growth of 9.88% over the last twelve months and an impressive five-year revenue CAGR of 28%, AMD continues to show strong momentum. However, the Data Center’s revenue fell slightly short of Raymond James’ model, and AMD’s management has indicated an expected quarter-over-quarter decline in AI (MI3xx) revenue. InvestingPro subscribers can access 15+ additional exclusive insights about AMD’s financial health and growth prospects.
Pajjuri noted that despite the after-hours market reaction to the AI revenue guidance, AMD’s management anticipates approximately $7.5 billion in revenue for the MI3xx in 2025, aligning closely with recent investor expectations. AMD has also made significant strides with key clients such as META (NASDAQ:META) and Microsoft (NASDAQ:MSFT), and the company hinted at forthcoming announcements of additional major customer engagements in the next few quarters.
AMD’s product roadmap is reportedly ahead of schedule, with the MI350 series expected to ramp up by mid-2025, potentially leading to a robust second half of the year. The analyst also mentioned that while Server CPU market gains are on track, the recovery in the Embedded segment appears to be more subdued.
In light of these factors, Raymond James has revised its estimates downward, attributing the decision to the weaker MI3xx performance and a conservative stance on PC demand. Despite the competition from NVIDIA (NASDAQ:NVDA) and ASICs, the firm believes that achieving a 10-20% market share in the AI GPU segment is within reach for AMD, which could fuel double-digit growth for the next two to three years. This aligns with InvestingPro’s analysis, which shows AMD maintaining a "FAIR" overall financial health score, with particularly strong cash flow metrics. The reiteration of the Outperform rating reflects the firm’s continued positive outlook on AMD’s stock, supported by analyst consensus recommendations and the company’s strong market position in the semiconductor industry.
In other recent news, Advanced Micro Devices Inc. (NASDAQ:AMD) has been a focal point for several analyst firms. KeyBanc Capital Markets lowered its price target on AMD to $140 from $150, maintaining an Overweight rating. This adjustment follows AMD’s recent earnings report, with Q4 results and Q1 guidance meeting expectations. Despite underperformance in the Data Center segment due to a slump in GPU demand, AMD’s Client segment revenues remained robust.
Simultaneously, Barclays (LON:BARC) reiterated its Overweight rating on AMD with a price target of $140, highlighting the company’s Client business as a significant element in its performance. Barclays also noted AMD’s plans to introduce new AI products, which are expected to contribute to the company’s growth.
On the other hand, BofA Securities reduced its price target on AMD to $135 from $155, while maintaining a Neutral stance. Despite AMD’s strong Q4 performance and optimistic Q1 sales projections, BofA expressed concerns about AMD’s position in the competitive AI market.
Lastly, Northland maintained an Outperform rating on AMD with a target price of $175, emphasizing the potential of AMD’s open-source approach and its capability to challenge established competitors in the server market. These recent developments reflect the varying perspectives of analyst firms on AMD’s performance and future trajectory.
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