Semiconductor giant Advanced Micro Devices AMD reported first-quarter revenue and earnings Tuesday that beat analyst estimates.
Here is how Wall Street analysts are reacting to the results and updated guidance.
The AMD Analysts: Cantor Fitzgerlad analyst C.J. Muse has an Overweight rating and lowered the price target from $190 to $170.
Mizuho analyst Vijay Rakesh has a Buy rating and lowered the price target from $235 to $215.
Piper Sandler analyst Harsh Kumar has an Overweight rating and lowered the price target from $195 to $175.
Goldman Sachs analyst Toshiya Hari has a Buy rating and lowered the price target from $180 to $175.
KeyBanc analyst John Vinh has an Overweight rating and lowered the price target from $270 to $230.
Wedbush analyst Matt Bryson has an Outperform rating and price target of $200.
Truist analyst William Stein has a Hold rating and lowered the price target from $174 to $162.
Roth MKM analyst Suji Desilva has a Buy rating and lowered the price target from $190 to $180.
Cantor Fitzgerald On AMD: AMD’s share momentum could be hit by capped earnings leverage, Muse said after the first quarter report.
"The MI300 ramp is truly impressive, but supply constraints are limiting a vision for even greater upside where many investors have been discussing much higher #s up until recently," the analyst said.
Muse also cautioned on gaming segment weakness that could offset growth in other areas.
"Add it all up, and it now appears CY24/25 revenues are tracking to $25.5B/$30.5B – for solid growth of 13%/20%, but below consensus coming in at $25.8B/$32.4B."
The analyst said the "2025 and beyond story remains intact" with artificial intelligence a key opportunity for AMD — the No. 2 merchant AI supplier behind NVIDIA Corporation NVDA.
Mizuho On AMD: The outlook for AMD’s artificial intelligence segment is below expectations, said analyst Rakesh.
"AMD guided 2024 AI GPU revenue to >$4B, slightly below optimistic Street expectations of $6-$10B, but also noting ‘not supply limited and 2H-weighted," the analyst said.
The analyst said there is a concern that aggressive pricing from Nvidia and good lead times could hurt AMD.
"Overall, we believe AI demand remains strong and AMD provides a strong second-source supplier (with key customers GOOGL, META, ORCL, Corewave, TSLA)."
Piper Sandler On AMD: AMD’s gaming and embedded segments struggled in the first quarter and were key headwinds, Kumar said.
"That said, the parts of the business that matter in our view, namely MI300 and the server business, did exceedingly well and continue to get better," the analyst said.
MI300 demand is set to exceed supply, with supply ramping up in each quarter of 2024, Kumar said.
"We feel AMD continues to deliver on its core businesses that investors care about with headwinds from non-core pieces."
Goldman Sachs On AMD: The company's data center GPU growth and server CPU share gains were highlights in the first quarter, according to Hari.
"While the positive revision to AMD's 2024 Data Center GPU revenue outlook to $4.0 billion may have underwhelmed the most bullish of investor expectations, we continue to believe that the company is making the appropriate investments and has the long-term product roadmap in place to benefit from growth in AI infrastructure spending," the analyst said.
The analyst said CPU market share gains could continue in the second half of 2024 and in 2025.
AMD highlighted increased engagements with existing customers and onboarding new customers for its data center GPU ramp, Hari said.
AMD’s competition with Nvidia in the data center GPU market remains a concern, the analyst said.
"We look forward to learning more from AMD over the coming months and quarters about its long-term product roadmap and how it intends to differentiate vis-à-vis not only Nvidia but also custom compute solutions introduced by many of the cloud hyperscalers."
KeyBanc On AMD: AMD’s first-quarter results were solid, according to Vinh, with the second-quarter guidance coming in mixed.
"We are firm believers in AMD's revitalized product roadmap strategy, and product traction is compelling. However, expectations for share gains and growth are high," the analyst said.
The analyst is concerned there is risk to the stock, with its valuation sitting above peers and any downside in expectations weighing significantly on the stock.
Wedbush On AMD: The AI guidance from AMD implies quadruple digit year-over-year growth in GPU sales, Bryson said, adding the market reaction implies that "over 1,000% growth isn't enough.
"Despite AMD again lifting the bar for accelerator sales, with management now expecting to book north of $4B in 2024, the stock still fell in after-hours trading," the analyst said.
Investors could be missing the forest for the trees, similar to AMD's last quarterly earnings report and the resulting stock sell-off, Bryson said.
"The raised guide should have been viewed as AMD solidifying its position as the primary alternative to NVDA in the AI accelerator market."
Truist On AMD: The $4-billion guidance for data center GPU is not what bulls hoped for or what bears feared, Stein said.
The analyst said the guidance will draw a mixed reaction from investors. Stein has concerns around AMD's position versus Nvidia and new CPU competitors.
Roth MKM On AMD: The semiconductor company saw AI growth offset non-AI headwinds, Desilva said.
"We are encouraged that the company raised its CY24 AI GPU revenue expectation and is also seeing a tailwind with client AI PC, offsetting persistent inventory impact in other segments," the analyst said.
The analyst said MI300 GPU revenues have passed the $1-billion revenue mark in only two quarters.
"We are confident that the current ramp is diversified across multiple hyperscale and emerging enterprise customer opportunities versus CY23 dependence on a large HPC program ramp."
AMD Price Action: AMD shares are down 9.14% to $143.90 on Wednesday versus a 52-week trading range of $81.02 to $227.30. Shares of AMD are up over 60% in the last year.
Photo courtesy of AMD.
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