AMD Shares Surge Post-Q3 Earnings: Analysts Weigh In On Future Prospects

Shares of Advanced Micro Devices, Inc. AMD spiked higher on Wednesday after the company reported upbeat third-quarter earnings earlier this week.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Morgan Stanley On Advanced Micro Devices

Analyst Joseph Moore maintained an Overweight rating, while reducing the price target from $138 to $128.

“For us the headline was commentary that MI300 will be at least $2 bn in CY24, with data center GPU at about $400 mm in 1q, mostly from AI,” Moore said in a note.

“That plus substantial server momentum will drive data center from mid $8 bns to $10 bn+,” the analyst wrote. “The bad news is that embedded (Xilinx), which we knew was a problem, was much worse than we thought,” he added.

KeyBanc Capital Markets On Advanced Micro Devices

Analyst John Vinh reiterated an Overweight rating, while slashing the price target from $160 to $140.

AMD reported its third-quarter results broadly in-line with expectations but guided the fourth quarter lower, Vinh said.

“While data center is on track for HSD% growth and 50% 2H vs. 1H and PC is showing a strong recovery, this is being negatively impacted by a correction in Embedded and softer Gaming demand,” he added.

Raymond James On Advanced Micro Devices

Analyst Srini Pajjuri reaffirmed a Strong Buy rating, while reducing the price target from $145 to $125.

While the PC segment is recovering, CPU share gains are driving strong growth in Data Center in the back half of 2023, Pajjuri said in a note. “More importantly, management is projecting $2B+ in AI GPU revenue (MI300X) next year, which is well above our prior expectation,” he added.

“On the other hand, Embedded and Game Console businesses are facing more severe cyclical pressures than we had anticipated,” the analyst further wrote.

Check out other analyst stock ratings.

Bernstein On Advanced Micro Devices

Analyst Stacy Rasgon maintained a Market Perform rating, while raising the price target from $95 to $100.

“The initial release did not feel all that encouraging, and overall Street estimates likely need to come down on substantial weakness especially in gaming and embedded relative to expectations,” Rasgon wrote in a note. “However, investors got a bit of a treat on the call as the company kept the AI dream alive, sketching out the near to medium term MI300 trajectory,” the analyst added.

“AI GPUs are likely to run at ~$400M in Q1 and were suggested to run 'greater than $2B' in FY24 (a number that we think is below the more bullish investor expectations but one likely to be viewed as respectable enough for now),” he further stated.

BMO Capital Markets On Advanced Micro Devices

Analyst Ambrish Srivastava reiterated an Outperform rating and price target of $140.

The projection of $2 billion in MI300/AI-related DC GPU revenues in 2024 is “backed by engagements with multiple customers,” Srivastava said in a note.

“Overall, 4Q guidance missed consensus estimates, and the goodness of the MI300 number for 2024 is offset by a much lower Embedded and Gaming outlook,” he added.

Piper Sandler On Advanced Micro Devices

Analyst Harsh Kumar reaffirmed an Overweight rating and price target of $150.

“AMD delivered on Q3 earnings where it matters most in our opinion,” Kumar said in a note.

“While numbers are moving around, they are mostly from gaming and the embedded business, which are going through an inventory digestion phase,” the analyst wrote. “Importantly, growth centers for the company are still very much intact,” he added.

AMD Price Action: Shares of Advanced Micro Devices jumped 9.54% to close at $108.04 on Wednesday.

Now Read: No Rate Hike: Fed Maintains Interest Rates At 5.25%-5.5%, Keeps Future Options Open

Photo: Shutterstock