‘Big Things Ahead,' Says Top Investor About AMD Stock
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Yet, those doubts now appear to be fading. The Lisa Su-led company is increasingly viewed as a strong contender, perhaps not to dethrone Nvidia, but certainly to be the second-best option in the AI chip race.
That renewed optimism is reflected in the stock's recent performance, with shares up 122% since bottoming out in April. And with AMD set to report Q2 earnings next Tuesday (Aug 5), some investors believe the rally still has legs.
One of them is top investor Danil Sereda, who's ranked among the top 2% of stock pickers on TipRanks. Looking ahead, Sereda thinks the chip giant is set to deliver an investor-pleasing readout.
'AMD heads into Q2 FY2025 earnings with strong momentum, driven by robust AI and data center demand, and a history of consistent double-beats,' the 5-star investor said.
Indeed, while questions about AMD's AI positioning have lingered, the company has continued to turn in solid financial results. That was evident in Q1, when AMD topped both revenue and earnings estimates. A key driver was the Data Center segment, which posted $3.7 billion in revenue – a 57% year-over-year increase – thanks to strong demand for EPYC CPUs and Instinct GPUs. During the earnings call, management emphasized growing traction with hyperscalers and enterprise customers, supported by more than thirty new cloud instances and expanding on-premise adoption for the seventh consecutive quarter.
Sereda believes this momentum is far from a fluke. With MI300 series GPUs gaining traction, the rollout of MI350 samples underway, and Oracle making a multi-billion-dollar commitment to MI355x, the investor sees AMD's AI strategy gaining meaningful ground.
These developments, coupled with new Tier 1 partnerships and the ZT Systems acquisition, suggest AMD is positioning itself to capture a growing share of what was estimated last year as a $500 billion AI compute market – a figure that may now understate the opportunity, given sustained hyperscaler demand.
'With the MI350 and upcoming MI400 series, AMD should eventually narrow the gap with Nvidia,' Sereda opined.
Given the strong setup heading into the earnings print, Sereda admits it might look risky to recommend buying the stock just a week ahead of results, but he believes the odds of another upbeat quarter are 'quite high,' especially with the Data Center segment poised to extend its revenue share gains and boost margins and overall growth.
In light of this bullish thesis, Sereda rates AMD shares a Buy. (To watch Sereda's track record, click here)
Meanwhile, Wall Street takes a more measured stance. AMD stock holds a Moderate Buy consensus, based on 26 Buys and 10 Holds. However, with the average price target of $147.83 implying a ~15% downside from current levels, some analysts may soon be forced to revisit their forecasts. (See AMD stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
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