Shares of Advances Micro Devices, Inc. rallied strongly as they fell off the all-time closing high of $174.23 reached on Friday.
The strength is apparently in reaction a positive analyst action. In morning trading, the stock rose 5.01% to $176.86.
Advanced Micro Devices is making its presence felt in the AI sector, and some believe the Santa Clara, Calif.-based company could challenge Nvidia for AI chip dominance this year.
Wall Street analysts have responded favorably to AMD in recent weeks. Cantor Fitzgerald recently initiated AMD with an overweight rating and a $190 price target. Earlier this month, analysts at TD Cowen raised their price target on AMD to $185 from $130 per share while maintaining an outperform rating on the stock.
Late Tuesday, New Street Research analyst Pierre Ferragu upgraded AMD stock from Neutral to Buy with a $215 price target. This suggests an upside potential of about 28% for the stock over the next 12 months.
In a post on X, formerly Twitter, the analyst said earlier this month, spending on AI chips will boom to $400 billion by 2027. This would mean “GPU and TPU shipments quadrupling, Other in-house accelerators ramping to represent 2x the TPU footprint,” he said.
“Nvidia, Inc. and all other silicon suppliers would massively beat expectations, even if this scenario only partially materializes,” Ferragu said. The analyst rates Nvidia a Buy with a $700 price target, a 17% upside from current levels.
AMD is scheduled to report its fourth-quarter results Tuesday after the market closes. Analysts, on average, expect the company to report non-GAAP earnings per share of 77 cents and revenue of $6.12 billion, according to Benzinga Pro data.