AMD's Near-Term Pullback a Buying Opportunity with Strong Revenue Projections in AI: Analyst

Advanced Micro Devices, Inc AMD shares are trading higher Tuesday amid positive AI momentum as Raymond James analyst Srini Pajjuri reiterated a Strong Buy on the stock with a price target of $145.00.

Potential risk to AMD's 3Q outlook is evident given the recent results and comments from Taiwan Semiconductor Manufacturing Company Ltd TSM, Nokia Corp NOK, and Ericsson ERIC. The analyst expected any weakness to be temporary and see an acceleration starting in 4Q driven by broadening Genoa and Bergamo CPU ramps, cyclical PC recovery, and El Capitan supercomputer. 

Also Read: Here's What AMD CEO Lisa Su Had To Say About The Chipmaker And Nvidia

Pajjuri is not overly concerned about GPU cannibalization risk and sees an upward bias to current Cloud capex forecasts. More importantly, AMD's Gen AI GPU (MI300X) is on track to launch in 4Q and appears well-suited for internal inferencing workloads at Hyperscalers. 

The analyst believed AMD is working with Microsoft Corp MSFT, Meta Platforms, Inc META, and Amazon.Com, Inc AMZN, and his base case is for a few hundred million dollar revenues in 2024 (supply chain points to potentially more considerable contribution). 

Longer term, the analyst sees no reason why AMD cannot capture a 10% - 20% share of the inferencing market, which could mean multi-billion dollar revenues with accretive margins. 

Pajjuri viewed any near-term pullback as a buying opportunity and estimated a Non-GAAP FY23 EPS of $2.82 and FY24 of $4.04.

Price Actions: AMD shares traded higher by 2.01% at $112.83 on the last check Tuesday.

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