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Roth/MKM has maintained a Buy rating on AMD (NASDAQ: AMD) with a steadfast $200.00 price target.
The endorsement follows AMD's presentation at the Advancing AI event, where the company outlined its position in the rapidly growing AI infrastructure sector.
AMD highlighted a surge in AI accelerator demand, now projected to reach a $500 billion addressable market by the calendar year 2028, marking a compound annual growth rate (CAGR) of 60%. This forecast is an increase from the previous estimate of a $400 billion market by 2027 with a CAGR of 50-70%.
AMD reported a record 34% market share in cloud x86 processors for the third quarter of 2024, signaling robust gains with hyperscale providers and consistent traction in the enterprise market.
The company's growth is attributed to its competitive product offerings in the cloud server segment, particularly the AMD Turin processor. According to AMD, this processor, along with AI efficiency improvements, could enable a new server to replace up to seven older servers.
The firm anticipates that the need for advanced cloud servers will be further propelled by an upcoming server upgrade cycle.
The cycle is expected to be driven by the AMD Turin processor's performance and its ability to facilitate AI efficiency gains. AMD's products are also seen as a go-to solution for hyperscalers that are preparing to meet the more demanding infrastructure needs of emergent agentic AI applications. These applications are likely to follow the recent installations based on generative AI technologies.
In other recent news, Advanced Micro Devices (NASDAQ:AMD) has made significant strides in the realm of artificial intelligence (AI) and high-performance computing. AMD's Q2 revenues surpassed Street consensus, reaching $5.835 billion, with its data center segment showing record revenue growth of 115% to $2.8 billion.
The company recently launched its 5th Gen AMD EPYC server CPUs, AMD Instinct MI325X accelerators, and third-generation Ryzen AI PRO 300 Series mobile processors, all aimed at boosting AI performance. Truist Securities maintained its Hold rating on AMD, setting a price target of $156, while Citi and Wells Fargo maintained their Buy and Overweight ratings respectively.
InvestingPro Insights
AMD's strong position in the AI infrastructure sector, as highlighted in the article, is reflected in several key metrics from InvestingPro. The company's market capitalization stands at an impressive $265.72 billion, underscoring its significant presence in the semiconductor industry. AMD's revenue growth of 6.4% over the last twelve months and 8.88% in the most recent quarter aligns with the company's reported market share gains and increasing demand for AI accelerators.
InvestingPro Tips further support AMD's growth narrative. One tip notes that AMD is a "Prominent player in the Semiconductors & Semiconductor Equipment industry," which is consistent with its leading position in cloud x86 processors. Another tip indicates that "Net income is expected to grow this year," suggesting continued financial strength as AMD capitalizes on the expanding AI infrastructure market.
It's worth noting that AMD is trading at a high P/E ratio of 195.92, which may reflect investor optimism about the company's future growth prospects in the AI sector. For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips on AMD, providing a deeper understanding of the company's financial health and market position.
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