The Top Reasons Advanced Micro Devices Easily Could Race to $120

The last time I weighed in on Advanced Micro Devices (NASDAQ:AMD), I said the stock could easily explode to $100 a share. That was on July 30, as the AMD stock traded at just $75. Today, it’s around $93. Nowadays, I’m waiting for the stock to break out to $120 a share.

AMD (AMD) sign outside of office building with greenery

Source: JHVEPhoto / Shutterstock.com

AMD has plenty of sizable catalysts, including its exposure to gaming, the work-from-home trend, cryptocurrency mining and data centers. It’s also well-positioned for growth with EVs.

In short, there’s a lot to get excited about when it comes to the AMD stock.

In its last quarter, AMD posted adjusted EPS of 52 cents, which came in above expectations for 47 cents. Revenue came in at $3.24 billion, as compared to estimates for $3.03 billion.

Then it posted a strong forecast of between $3.1 billion and $3.3 billion.

AMD Stock and Projected Growth

AMD expects 2021 revenue to grow by up to 37%. Advanced Micro Devices’ biggest catalyst was its enterprise segment. This is the arm of the company that sells server chips, CPUs, and graphics processors for the new gaming consoles from Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT). That segment saw revenue jump 176% year over year, and 13% quarter over quarter.

“We significantly accelerated our business in 2020, delivering record annual revenue while expanding gross margin and more than doubling net income from 2019,” said AMD president and CEO Dr. Lisa Su.

In late 2020, AMD announced plans to buy Xilinx (NASDAQ:XLNX) in a $35 billion deal. Expected to close later this year, it could allow AMD to compete far more aggressively in a potential $20 billion data center chip market.

Better, Advanced Micro Devices’ Ryzen 5000 chips were so popular they sold out in a matter of minutes on day one of sales. Reportedly, they’re twice as fast as the original Ryzen processors.

In addition, according to InvestorPlace contributor Louis Navellier, “AMD announced hundreds of new laptops equipped with Ryzen chips are coming this year. Many of the hottest new gaming laptops unveiled at CES 2021 feature the powerful new Ryzen chips.”

After chipping away at the desktop PC market last year, it’s set to take more market share from the laptop market this year. In short, there’s a lot to get excited about with AMD stock.

Analysts Still Love AMD

Jefferies’ analyst Mark Lipacis reiterated his buy rating on the stock with a $110 price target. He expects AMD’s server share gains to accelerate as AMD increases its 7nm Milan CPUs in the first quarter and 5nm Genoa CPUs in 2022.

And he wasn’t alone. Argus’ analyst Jim Kelleher raised his price target to $106 with a “buy” rating; Loop Capital’s Cody G. Acree raised his price target to $115 with a “buy” rating; Craig-Hallum analyst Christian Schwab raised his target to $120 with a “buy” rating; and Cowen’s Matthew Ramsay raised his price target to $120 with an “outperform” rating.

Even analysts at Truist Securities, Bank of America, Susquehanna, Rosenblatt, Mizuho Securities, and Barclays raised their price targets on AMD.

The Bottom Line on Advanced Micro Devices Stock

After coming close to my 2020 target prices of $100, AMD stock may have backed off a bit. However, with its exposure to gaming, the work from home trend, cryptocurrency mining, and data centers and EVs, its well-positioned for long-term growth.

In addition, it continues to gain market share, and there’s really no shortage of love from analysts at multiple firms. By year-end, I believe AMD could be well above $120 a share.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. A contributor to InvestorPlace.com, Ian Cooper has been analyzing stocks and options for web-based advisories since 1999.


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