Advanced Micro Devices will continue its strong performance after meeting or exceeding all targets for the past two years, Piper Sandler said of the semiconductor company.
It posted a note Tuesday ahead of AMD's analyst day on June 9, which it said would likely be "transformative."
Analyst Harsh Kumar reiterated his Overweight rating on the AMD (ticker: AMD) stock and his price target of $140-a-share.
Firstly he cited the success of AMD's organic business, particularly servers and commercial PCs, and secondly the recently closed acquisition of rival Californian chip maker maker Xilinx, which makes programmable chips used in data centers, for his bullish stance.
Thirdly he wrote that AMD has "substantially met or exceeded" all of the previous targets laid out at the 2020 analyst day, saying he expected management to provide new targets that extend to the 2026 time frame. Specifically, he sees AMD providing new goals for revenue growth, gross margin, operating margin, capital returns, technology leadership, server market share, and PC market share.
"Despite all the moving pieces (slowing consumer PC market and a semi-custom peak in 2023), we expect AMD to provide a long-term growth rate of 17%-20% through 2026," Kumar wrote. The growth rate will be determined by the success of Xilinx, which is currently growing around 20% year-over-year, Kumar said, noting that the server business is on track to double year-over-year, and the commercial PC segment is "holding up well."
AMD shares fell 1% to $104.63 in premarket trade on Tuesday. The stock has fallen more than 26% since January 2022.
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