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Santa Clara, California-based Advanced Micro Devices, Inc. (AMD) produces semiconductor products and devices. Valued at $240.1 billion by market cap, the company offers products such as microprocessors, embedded microprocessors, chipsets, graphics, video and multimedia products and supplies it to third-party foundries, as well as provides assembling, testing, and packaging services.
Shares of this semiconductor giant have underperformed the broader market considerably over the past year. AMD has gained 24.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 35.9%. In 2024, AMD stock is down marginally, compared to the SPX’s 25.8% rise on a YTD basis.
Narrowing the focus, AMD’s underperformance looks more pronounced compared to the iShares Semiconductor ETF (SOXX). The exchange-traded fund has gained about 36.8% over the past year. Moreover, the ETF’s 17.5% gains on a YTD basis outshine the stock’s losses over the same time frame.
Investors are feeling apprehensive about AMD's performance in the global AI market, due to concerns about its ability to capture a significant market share amidst a competitive supply landscape. AMD's management has set ambitious targets for the growth of its data center GPU segment in the AI accelerator market. However, the company's decision to only slightly raise revenue guidance for its data center GPU segment to $5 billion for 2024 has left some investors uncertain about the current momentum of its AI business.
On Oct. 29, AMD shares closed up more than 3% after reporting its Q3 results. Its adjusted EPS of $0.92 beat Wall Street expectations of $0.91. The company’s revenue was $6.8 billion, surpassing Wall Street forecasts of $6.7 billion. For Q4, AMD expects revenue to be between $7.2 billion and $7.8 billion.
For the current fiscal year, ending in December, analysts expect AMD’s EPS to grow 27.1% to $2.53 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 38 analysts covering AMD stock, the consensus is a “Strong Buy.” That’s based on 31 “Strong Buy” ratings, one “Moderate Buy,” and six “Holds.”
The configuration has been consistent over the past three months.
On Nov. 6, Phillip Securities analyst Jonathan Woo maintained a “Buy” rating on AMD with a price target of $170, implying a potential upside of 15.4% from current levels.
The mean price target of $190.81 represents a 29.5% premium to AMD’s current price levels. The Street-high price target of $250 suggests an ambitious upside potential of 69.7%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
