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AMD shares gain on cloud adoption, Citi maintains $176 target

EditorBrando Bricchi
Published 17/05/2024, 21:18

On Friday, Citi maintained a Buy rating and a $176.00 price target for Advanced Micro Devices, Inc. (NASDAQ:AMD). The firm's positive stance comes in the wake of a recent development where Microsoft (NASDAQ:MSFT) announced it would incorporate AMD's MI300 AI chips into its cloud offerings, a move that also includes Nvidia (NASDAQ:NVDA)'s products. This decision by Microsoft is seen as a significant endorsement of AMD's technology.

The adoption of AMD's AI chips by a major cloud services provider like Microsoft is a testament to the maturation of AMD's software stack, which is now considered ready for customer deployment. This development is particularly noteworthy as it follows AMD's own revised sales guidance for the MI300, which was increased from an initial forecast of over $3.5 billion to over $4.0 billion for the calendar year 2024.

Citi's commentary highlights the potential for AMD's sales to continue to rise throughout the summer months. The firm's reiteration of the Buy rating and price target reflects confidence in AMD's market position and the anticipated positive impact of the Microsoft deal on the company's performance.

The news of AMD's chips being offered to Microsoft's cloud customers has contributed to the company's shares trading higher on Friday. This reflects investor optimism about AMD's growth prospects in the competitive cloud computing space.

Overall, Citi's outlook for AMD remains strong, with the firm expecting the company's strategic moves and product offerings to drive further financial success in the near future. The price target of $176.00 remains unchanged, indicating a belief in sustained value for AMD's shares.

InvestingPro Insights

Advanced Micro Devices, Inc. (AMD) continues to attract attention following Citi's reaffirmed Buy rating, with real-time data from InvestingPro underscoring the company's market position. AMD's market capitalization stands at a robust $265.84 billion, reflecting its significant presence in the semiconductor industry. Despite a slight decline in revenue over the last twelve months as of Q1 2024, with a -1.16% change, the company's gross profit margin remains high at 50.56%, indicating efficient operations and a strong ability to convert sales into profit.

InvestingPro Tips suggest that while AMD is trading at a high earnings multiple with a P/E ratio of 237.4, it is also expected to see net income growth this year. Additionally, AMD is a prominent player in the Semiconductors & Semiconductor Equipment industry and operates with a moderate level of debt, which could be reassuring for investors considering the company's financial health. For those looking to delve deeper into AMD's performance metrics and gain further insights, there are 17 additional InvestingPro Tips available, which can be accessed with a special offer using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.

With AMD's next earnings date set for July 30, 2024, investors will be keen to see how the company's strategic initiatives, such as the collaboration with Microsoft, will influence its financial outcomes. The recent uptick in stock price, highlighted by a 56.74% one-year price total return, suggests that the market is optimistic about AMD's trajectory. The InvestingPro Fair Value estimate stands at $132.19, offering a grounded perspective on the stock's value.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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