June 11 - Last month, AMD (AMD, Financial) posted stronger-than-expected quarterly results, beating both EPS and revenue forecasts. The company cited robust demand in its Data Center segment, which saw revenue jump 57% year on year and operating income rise 72%.
Management offered upbeat guidance for the next quarter despite lingering macro challenges, including shifting tariffs and trade tensions. The Data Center unit, crucial to AMD's valuation, could exceed $20 billion in revenue for fiscal 2025, driven largely by AI chip sales.
At its 2021 peak, AMD shares traded above $150; they're near $123 now, having climbed about 2% year to date. While AMD remains second to NVIDIA Corporation (NVDA, Financial) in AI processors, expanding AI revenue share may boost margins and sentiment. New chip launches continue to draw positive third-party reviews.
Analysts project AI chip sales could hit $13–$15 billion in 2025, supported by large deals such as a reported $10 billion agreement with a Saudi AI startup. AMD's pricing edge and diversified customers may help narrow the gap with NVDA's leading offerings.
Intel Corporation (INTC, Financial) remains a competitor in CPUs, but AMD's growing server market share underpins a higher valuation multiple. The company also unveiled an additional $6 billion share buyback, bringing total authorization to $10 billion. That may support the stock if AI-driven growth persists amid macro uncertainties.
Is AMD Stock a Buy Now?
Based on the one year price targets offered by 41 analysts, the average target price for Advanced Micro Devices Inc is $129.18 with a high estimate of $200.00 and a low estimate of $95.00. The average target implies a upside of +4.82% from the current price of $123.24.
Based on GuruFocus estimates, the estimated GF Value for Advanced Micro Devices Inc in one year is $165.20, suggesting a upside of +34.05% from the current price of $123.24.
