AMD Among "Best Positioned" AI Players, Analyst Says

Some analysts have questioned the timetable for AMD's AI revenue opportunities, but a Benchmark analyst is upbeat about the long-term potential

AMD’s latest earnings report and commentary were met with a negative reaction from Wall Street Wednesday.

Advanced Micro Devices Inc. shares took a hit after earnings as analysts posed questions about the company's artificial-intelligence timeline, but perhaps the company is in a better spot to take advantage of AI than others are letting on.

Benchmark analyst Cody Acree, who has a buy rating and fresh $145 price target on AMD's stock $(AMD)$, said in a recent note that he believes the chip maker is "among the best positioned companies to benefit from the tech sector's broad macro-economic adoption" of AI.

Meanwhile, AMD on Thursday announced two new additions to its Radeon line of graphics cards: the Pro W7600 and the Pro W7500 workstation GPUs, designed to accelerate workloads in the media, entertainment, and design industries.

Acree's note comes as some analysts have wondered whether expectations for AMD this year are too high in light of the company's latest earnings report and commentary. Nvidia Corp. (NVDA), which is expected to be the biggest hardware beneficiary from AI, is scheduled to report earnings, along with sales of new AI data center products, on Aug. 23.

AMD shares sold off 7% Wednesday after the company's earnings report but rallied 3.5% on Thursday.

"While the data regarding the supply & demand balance of the PC/laptop & server markets continue to be mixed, we believe the worst of the semiconductor industry's cyclical correction is now passed, with most of the excess component and finished goods channel inventory having corrected during the first half of this year, which we expect will lead to an upward bias to Street earnings forecasts throughout the remainder of this earnings season," Acree said.

Slated for release later this year, the Pro W7600, which has 64 AI accelerators, is priced at $599, while the Pro W7500, with 56 AI accelerators, is listed at $429, AMD said. Both cards run on AMD's RDNA 3 chip architecture.

"Further accentuating our belief that the chip industry's cyclical bottom has already been seen, AMD is expecting its data center and client segments to grow at a double-digit pace," Acree noted, offsetting declines in its gaming and embedded segments.

Of the 45 analysts surveyed by FactSet, 30 have buy-grade ratings, and 15 have hold ratings, with an average target price of $140.52.

AMD shares are up 76% year to date, compared with a 46% gain by the PHLX Semiconductor Index , a 17% gain by the S&P 500 and a 46% gain by the tech-heavy Nasdaq Composite Index . Meanwhile, shares of Nvidia, which is expected to benefit the most out of AI, are up 205% year to date.