Advanced Micro Devices (NASDAQ:AMD) stock is in the green Thursday after UBS raised its price target on the chipmaker ahead of its fourth-quarter earnings due next week.
So, is AMD the new “it” chip stock?
Well, it certainly might be, at least according to UBS. Indeed, the firm raised its 2024 price target to $220 per share, up from $135. UBS is “more confident” in AMD’s data center GPU-based income as reflected by commitments for more than 400,000 of its MI300A/X GPUs this year.
“This is a number that is fairly consistent with where we have seen demand since last summer but we’ve been wary of double ordering and unsure of supply,” UBS analysts noted. “Even assuming a very conservative ASP (which could be as high as $20k+ for some customers), this suggests $5B for data center GPU [revenue] is a pedestrian target for this year.”
UBS believes AMD may end up annualizing earnings in excess of $6 per share this year, potentially approaching $8 per share by the second half of 2025.
AMD Stock Climbs Ahead of Q4 Earnings
AMD stock has enjoyed a strong start to the year as one of many beneficiaries of the artificial intelligence (AI) wave taking hold of the market. Indeed, AMD is already up nearly 30% year-to-date (YTD), less than a month into 2024. This, of course, comes after the company’s 140% gains in 2023.
AMD is considered at the forefront of 2.5/3D chips, which permit a new level of computing complexity compared to traditional flat semiconductors. The firm’s MI300X series GPUs, which contain 3D chips, are notable for their improvement over previous generations of AI data-center processors.
As such, AMD is considered a rival to Nvidia (NASDAQ:NVDA) and its H100 data center GPUs, the current market leader. In fact, the MI300X should have “2.4 times the memory and 1.6 times the memory bandwidth of the H100,” offering better overall AI inferencing performance.
AMD is scheduled to report its fourth-quarter financial results on Jan. 30. The company is expected to report 11% EPS growth, climbing to 77 cents from 69 cents on $6.1 billion in revenue.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
