Many investors and analysts agree that Advanced Micro Devices (NASDAQ:AMD) stock is solid, but a stunning report from Intel (NASDAQ:INTC) might scare you away from the semiconductor sector altogether. There’s no need to worry, though. Our AMD stock analysis reveals that it’s still a worthy portfolio holding that fully deserves an “A” grade in 2024.
AMD’s data-center graphics processing unit, the MI300, is ideal for powering artificial intelligence applications. The MI300 will undoubtedly be a strong revenue generator for AMD this year. So, if Intel has to play catch-up, don’t think of this as AMD’s problem.
INTC Stock Drags Down AMD Stock
Don’t get the wrong idea. We’re not taking a position against Intel. We’re only saying that investors shouldn’t conflate Intel’s situation with AMD’s situation, as they’re quite different.
The market dumped practically all semiconductor stocks on Jan. 26 because INTC stock fell around 12%. AMD stock declined 1.71% on that day.
Just to recap, Intel’s fourth-quarter 2023 results actually weren’t too bad. However, the company’s current-quarter sales and profit guidance came in far below Wall Street’s estimates.
If this makes you nervous, just consider that, to a certain extent, Intel’s weak guidance results from AMD’s strength. Intel’s market-share loss is AMD’s gain. This isn’t a call for anyone to sell Intel stock, but only a reminder that Intel will have a tough time competing against AMD’s top-tier MI300 GPU lineup.
Could the AMD Share Price Quadruple?
While some jittery investors might worry about AMD, analysts are generally bullish. Indeed, one analyst actually mulled the idea that AMD stock might quadruple in the coming years.
We’re not trying to put that idea into your head. Still, NewStreet Research analyst Pierre Ferragu has an interesting argument. He pointed to AMD CEO Lisa Su’s forecast that the market for data-center AI chips would reach $400 billion by 2027.
Even if that market only reaches $200 billion, half of Su’s projection, this would still represent remarkable growth. In this “fast adoption” scenario, according to Ferragu’s calculations, total data-center spending would grow at an annualized rate of 25%.
Furthermore, in this same scenario, Ferragu believes AMD stock could quadruple from its current price. Thus, Ferragu concludes, investing in AMD is the “best way to play a fast adoption scenario, with the most valuation and expectation upside.”
There’s a fair measure of optimism accounted for in this scenario, but it’s not impossible. If you’d prefer to build a more level-headed bullish argument, consider Wedbush Securities analyst Matt Bryson’s perspective.
Bryson cited the “potential for MI300 to gain traction” as he assigned a $200 price target to AMD stock. He also stated, “The shifts in assumed data center GPU sales dramatically boost our overall outlook for AMD.” That’s not an unreasonable argument at all, and it doesn’t require anyone to aim for a share-price quadrupling.
AMD Stock Analysis: Don’t Get Distracted by Intel’s Issues
We’re not Intel haters, by any means. At the same time, investors shouldn’t lose faith in AMD based on Intel’s soft guidance.
At the end of the day, our AMD stock analysis suggests the possibility of significant upside in 2024. Who knows – maybe the AMD share price will quadruple someday.
Yet, you don’t have to be an ultra-optimist to appreciate AMD’s value proposition. Irrespective of Intel’s issues, AMD remains a power player among processor producers. Hence, investors should think about buying and holding a few AMD shares this year.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
