AMD stock could rise 63% as the chipmaker has big market share left to take in multibillion dollar market, Bank of America says
AMDstock could soar by 63% to $190 each, Bank of America said Wednesday.
- BofA raised the price target to a Wall Street-high as it sees AMD's potential to capture a large share of the PC/Server CPU market.
AMD stock could climb by more than 60%, Bank of America said Wednesday in seeing the chipmaker's potential to grab a much larger share in a multi-billion dollar hardware portion of the technology market.
Shares of the company climbed as much as 11% to $130.06, hitting a two-week high following blowout fourth-quarter financial results released late Tuesday.
The investment bank on Wednesday reiterated its buy rating on AMD and raised its price target to $190, which it said is the highest target among Wall Street analysts. A move to that price would imply a 63% rise from Tuesday's close at $116.78.
Bank of America said a 68% climb in AMD's year-over-year revenue to $16.4 billion, among other things, underscores its pipeline strength, consistency of management execution, and reliability of supply from key foundry partners. It also noted AMD's compound annual growth rate of 54% in the PC/Servers segment over the past five years.
"Despite AMD's solid growth … we estimate its revenue share in PC/Server CPU is still only 15%, suggesting potentially 85% of the (growing) $70 billion market is still ripe for gains against Intel," BofA research analyst Vivek Arya said in the note published Wednesday.
Intel, he said, "continues to be challenged from a manufacturing focus (expensive and non-strategic foundry distraction) and financial perspective."
BofA now foresees AMD server sales to climb 62% year-over-year to $5.5 billion for the calendar year 2023 compared with the $5 billion consensus estimate. That implies AMD's market share to increase to 19% from 13% year-over-year.
It also sees potential for AMD's market share to move towards 35%, above a prior peak of 32% peak, on stronger pricing of the AMD Secure Processor and "solid engagement" with ten of the top 12 hyperscale customers. Many of those customers are investing in multi-year projects involving cloud computing, AI, multiverse, e-commerce, video and gaming, said BofA.
AMD shares shot up Wednesday after the company forecast first-quarter sales of $5 billion, above Wall Street's view of $4.35 billion. Its fourth-quarter adjusted earnings of $0.92 a share outstripped the $0.76 a share projected in a FactSet survey of analysts.
Revenue jumped by 49% to $4.83 billion, higher than the estimate of $4.58 billion, fueled by its computing and graphics and enterprise, embedded and semi-custom segments.
The stock this year through Tuesday's session had lost about 19%, dragged down along with other large-cap tech stocks as investors price in expectations for the Federal Reserve to raise interest rates multiple times this year.
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