Street Calls of the Week
Investing.com -- Truist analysts said in a note Thursday that they see growing momentum for Advanced Micro Devices in the data center and AI markets, citing a shift in customer perception and encouraging feedback from management.
“We recently upgraded AMD based on feedback from our industry contacts… that suggested customers, who had previously viewed AMD as a ‘price check’ have recently transitioned to viewing AMD as a ‘real potential partner’ in the Datacenter/AI market,” Truist wrote.
The firm reiterated its Buy rating, $213 price target, and 2027 EPS estimate of $7.89 for AMD.
Following an investor dinner with AMD executives, Truist highlighted the MI355 GPU as a turning point for the company.
Analysts described it as the “Rome of datacenter GPUs,” echoing AMD’s trajectory in server CPUs, where it grew from “less than ~1% share in 2018 to ~21% today.”
The firm added that the progress is “not related to a single or small number of features, but instead an overall cadence of improving performance and usability across the hardware and software provided.”
Near-term business trends also look encouraging, according to Truist. AMD noted that demand for the MI355 is improving, alongside incremental demand for AI-adjacent x86 servers.
While the company expects some sales of “nerf’d” GPUs to China, Truist noted that geopolitical factors limit AMD’s reach there.
Software continues to be a focus, with management pointing to ROCm improvements. “Customers’ ability to use ROCm is significantly improving,” analysts said, citing a 3.5x inference performance gain from ROCm 6 to ROCm 7.
On profitability, Truist said MI355 margins are above prior GPU generations, though “slightly below the corporate average.” Analysts expect “growth in volume and gross profit dollars” despite some unpredictability in mix.