Advanced Micro Devices
’ big chip launch may have left investors feeling uninspired but Wall Street was more enthusiastic and still thinks the semiconductor company can challenge
Nvidia
and be an AI winner.
The stock fell 3.6% Tuesday after AMD (ticker:AMD) Chief Executive Lisa Su unveiled the company’s new AI chip—the MI300X. Customers will begin sampling the technology in the third quarter and production will ramp up in the fourth quarter, she said at an event in San Francisco.
Su also predicted the total addressable market (TAM) for data center AI accelerators will reach $150 billion in 2027, from around $30 billion this year.
Despite the fall, the shares have still climbed more than 90% so far in 2023, benefiting from the increased interest and hype around artificial intelligence. The stock also pointed more than 2% higher in premarket trading Wednesday.
KeyBanc Capital Markets analysts, led by John Vinh, said investors may have been disappointed by the fact that AMD didn’t announce
Microsoft
(MSFT) as a customer for the new chip.
However, Vinh said that was an “unrealistically high expectation,” given the chip won’t start being sampled by customers until the third quarter.
Another concern may be that AMD wasn’t able to make the same performance claims as
Nvidia
(NVDA), he said, adding that the company was still set to gain market share as an alternative.
The analysts remain bullish on the stock, reiterating an Overweight rating with a price target of $150, implying a 20% upside to Tuesday’s closing price. “Altogether, we thought it was a constructive event and maintain that AMD stands to be a major beneficiary and share gainer as it relates to generative AI,” they said.
Piper Sandler analysts maintained an Overweight rating and a $150 price target on the stock, and said the company has “all of the building blocks to address both cloud and enterprise customer needs.”
“We feel that the real star of the show was the commentary presented on AI strategy, with AMD taking the overall TAM up significantly from around $65 billion by 2025 to $150 billion by 2027,” they said.
Stifel analysts hiked their price target to $145 from $98, sticking to their Buy rating. “While the lack of a formal customer announcement in conjunction with the road map update is likely to be questioned, we believe that the product specifications should enable AMD to gain traction in LLM [large language model]/AI markets,” they said.
Write to Callum Keown at callum.keown@barrons.com
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