Advanced Micro Devices Inc (NASDAQ:AMD) reported forecast-beating fourth-quarter results and issued an upbeat guidance.
The AMD Analysts: BofA Securities analyst Vivek Arya reiterated a Buy rating on AMD shares and increased the price target from $175 to $190.
Raymond James analyst Chris Caso reiterated an Outperform rating and hiked the price target from $140 to $160.
KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating and upped the price target from $155 to $165.
Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating and increased the price target from $180 to $200.
The AMD Theses:
BofA Says AMD Still Has 85% Of Market To Capture: AMD's ability to deliver 68% year-over-year growth in 2021 and target 31% growth for 2022 underscores the strength of the company's pipeline, management execution and reliability of supply from key foundry partners, BofA analyst Arya said in a note.
Despite AMD's solid growth, its revenue share in the PC/Server CPU processor market is only 15%, suggesting potentially 85% of the $70 billion market is still ripe for gains against rival Intel Corporation (NASDAQ:INTC), the analyst said.
AMD's sales strength is being complemented with rising gross margin and EBIT, as well as multi-year engagement with strategic cloud and enterprise customers, he added.
The analyst sees $7-$8 in calendar year 2024 earnings power and named the stock as his top compute pick.
Related Link: AMD Previews 30 New Products At CES 2022: What You Need To Know
RayJay Does Not See AMD As Higher Multiple Stock: AMD put up an exceptional quarter and guidance, with growth led by server revenue, RayJay analyst Caso said. The company's 2022 guidance will likely move higher throughout the year as more supply becomes available, particularly in the second-half of 2022, the analyst said.
AMD gained 7% share in server and 2% in client share in 2021, Caso noted. The company is likely to see share gains of a similar magnitude in 2022, the analyst said.
AMD's January stock pullback, Caso indicated, was likely due to the market's aversion for high multiple stocks in light of rising rates. After adjusting numbers to reflect the new guidance, the analyst estimates 2023 EPS of $4.85, putting the stock at a reasonable 24x multiple.
"As such, we wouldn't consider AMD to be a high multiple stock at all – which is what happens when numbers go up by this much," the analyst said.
Rosenblatt Sees Emerging Secular Narrative For Shares: AMD crushed fourth-quarter results as well as its first-quarter and 2022 guidance, driven by significant demand and share gains in all key CPU and GPU segments, Rosenblatt analyst Mosesmann said. The 30% year-over-year growth implied by the 2022 sales guidance suggests the company will double the year-over-year data center dollar share to the mid-20s percentage, he added.
Although supply will continue to be a headwind for 2022, the company has been investing in significant capacity additions that have led to multi-quarter and multiyear customer engagements, the analyst noted.
AMD will continue to gain segment market share in PC CPUs in 2022 and 2023, Mosesmann said. AMD's lineup of 5nm server EPYC4 96-128 core CPUs will continue to add to the data center and enterprise momentum in 2022/23, partly assisted by a weak Intel server roadmap, the analyst added.
Intel's Sapphire Rapids is unlikely to tighten the existing core count, efficiency, and performance parameters AMD's existing EPYC3 portfolio enjoys, the analyst said.
"As we look at how AMD's business has evolved in CPU/GPU compute, how the team has executed near flawlessly, how AI is impacting the industry as the dynamic moves to the edge to production (inferencing), and with the inclusion of Xilinx, Inc. (NASDAQ:XLNX) programmable/ASIC thrusts, we see an emerging 'secular' narrative for the shares," Mosesmann wrote in the note.
AMD Price Action: At last check, AMD shares were rising 5.35% to $123.03.
Related Link: Ahead Of Tech Earnings, Analyst Names Nvidia And These 4 Semiconductor Stocks As 2022 Top Picks
Photo: Courtesy of amd.com
