AMD’s AI Push Leaves Wall Street Wanting More, But Analysts Remain Optimistic
Advanced Micro Devices (AMD) hosted its “Advancing AI 2024” event in San Francisco, showcasing its latest high-performance computing solutions. However, the tech giant’s presentation received a lukewarm response from investors and analysts alike. Despite the mixed reactions, many experts still see potential in AMD’s AI strategy.
New Products, Same Story?
AMD unveiled several new products at the event, including:
- 5th Generation AMD EPYC server CPUs
- AMD Instinct MI325X accelerators
- Ryzen AI Pro 300 Series PC processors
CEO Lisa Su announced that the MI325X would start shipping by the end of this quarter and be available in partner products in Q1 2025.
The company also updated its data-center AI accelerator market forecast, projecting growth from $45 billion in 2023 to over $500 billion by 2028. This represents a significant increase from their earlier estimate of $400 billion by 2027.
Wall Street’s Reaction: More Fizzle Than Sizzle
Many analysts found the event underwhelming, with some key points emerging:
- Oppenheimer viewed the AI day as “largely uneventful,” noting that management mostly recapped known product roadmaps.
- Wedbush analysts pointed out that AMD didn’t update AI sales guidance or announce any new major customers.
- Bank of America Securities noted that while there were “no big surprises,” AMD’s growth opportunities across data-center CPUs and GPUs remain unchanged.
- Piper Sandler took a more positive stance, raising its price target on AMD to $200 from $175 and maintaining an overweight rating.
The Nvidia Factor
A recurring theme in analysts’ reports was AMD’s position relative to its main competitor, Nvidia. Bank of America analysts stated that AMD’s latest Instinct MI325X GPU “remains a full year behind Nvidia’s latest Blackwell, with no near-term catalyst to change the dynamic.”
Jefferies analysts suggested that AMD’s MI350, expected next year, “would compete more favorably” with Nvidia’s Blackwell. For now, it seems AMD is playing catch-up in the AI chip race.
Looking Ahead: Potential Amid Challenges
Despite the somewhat muted response to the event, many analysts remain bullish on AMD’s long-term prospects in the AI market:
- Jefferies believes AMD’s new AI chips could drive further market share gains, citing “enough demand to go around” as companies build their AI infrastructure.
- Bank of America maintained its “buy” rating with a price target of $180.
- Most analysts tracked by Visible Alpha (13 out of 17) hold “buy” or equivalent ratings for AMD stock, with an average price target of $192.13.
Investor Takeaways
For those considering AMD as an investment, here are some key points to keep in mind:
- AMD’s stock has shown resilience, closing at $167.89 on Friday, up 13.9% year-to-date.
- The company’s forecast for the AI accelerator market suggests significant growth potential in the coming years.
- While AMD may be behind Nvidia in some areas, analysts see room for multiple players in the expanding AI chip market.
- Monitor AMD’s upcoming earnings reports for potential AI-related sales and partnership updates.
As the AI revolution continues to reshape the tech landscape, AMD’s role in this transformation remains a story worth watching. While the recent event may not have delivered the fireworks some investors hoped for, the company’s long-term strategy in the AI space could still yield impressive returns for patient shareholders.
Investors should always research and consider their risk tolerance before making investment decisions. As the AI market evolves, staying informed about AMD’s progress and competitive position will be crucial for those looking to capitalize on this growing sector.
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