Advanced Micro Devices Inc. shares have rocketed roughly 80% for the reason that firm final posted earnings. That means the stress is on heading into Tuesday afternoon’s report.
Despite the inventory’s large rally, AMD’s
AMD,
story in the meanwhile is blended, as the standard personal-computer and data-center markets are underneath stress. But AMD additionally has the potential to see extra traction with its data-center AI choices, and that’s been driving the inventory’s latest momentum.
Even so, some analysts are skeptical that the upcoming report might be a constructive catalyst. HSBC’s Frank Lee wrote earlier this week that there could possibly be some “disappointment” as pertains to the corporate’s forecast for its present quarter, given weak point in a number of key conventional enterprise areas.
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Meanwhile, “the recent AMD share price rally has raised expectations significantly, especially for its AI MI300 GPU revenue potential,” he continued. He sees “significant AI upside” as already priced into the inventory.
UBS’s Timothy Arcuri, in the meantime, sounded extra upbeat.
“The tactical setup around earnings is complicated somewhat by the recent rally, but we are nonetheless more confident on AMD’s data center GPU revenue opportunity,” he wrote, noting that he was “significantly” upping his full-year expectations for 2024 and 2025.
AMD shares have been off about 3% in Tuesday afternoon buying and selling heading into the report.
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What to count on
Earnings: Analysts tracked by FactSet count on AMD to put up 77 cents a share in adjusted earnings, up from 69 cents a share a 12 months earlier than.
Revenue: The FactSet consensus requires income of $6.1 billion, up from $5.6 billion a 12 months earlier than.
Analysts are in search of $2.3 billion in data-center income, up 39%, together with $1.5 billion in consumer income, up 70%. But gaming income is predicted to drop 25% to $1.2 billion and embedded income is projected to fall 24% to $1.1 billion.
Stock motion: Shares of AMD have fallen after three of the corporate’s previous 5 earnings reviews, although they gained 9.7% after the newest one.
Of the 46 analysts tracked by FactSet who cowl AMD shares, 33 have purchase rankings and 13 have maintain rankings, with a median value goal of $164.58.
What analysts are saying
Of key curiosity to analysts might be AMD’s commentary on its MI300 AI accelerator, after the corporate mentioned three months again that it anticipated upwards of $2 billion in income from data-center graphics processing models throughout 2024. The considering on Wall Street is that that concentrate on is now stale.
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“While we see our new estimate for the ‘plus’ as certainly debatable (with our model now assuming $3.1 billion in datacenter GPU revenue, vs. the ~$2 billion we had previously been modeling), we also would suggest that given AMD’s apparent customer base, that it’s very believable that AMD will be able to take a mid- to high-single-digit share of the overall AI market by the end of the year,” Wedbush’s Matt Bryson wrote just lately.
Stifel’s Ruben Roy wrote that whereas AMD’s MI300 household appears to be gaining momentum, demand isn’t the one issue.
“With the overall AI data center [total addressable market] continuing to accelerate, we continue to view AMD as well positioned to benefit as a diverse group of end customers continue to search out alternatives” to Nvidia, he wrote. “We believe that supply remains a gating factor and, on that front, our recent conversations with industry participants suggest an improving situation.”
Roy’s expectations for MI300 are across the roughly $2 billion the AMD forecasted final time round, although he mentioned “improving supply, coupled with strong ongoing demand, could result in meaningful upside as 2024 progresses.”
Susquehanna’s Christopher Rolland, in the meantime, prompt that expectations might have gotten sky-high.
“On average, investors we speak with are targeting closer to $6 billion, with some suggesting even higher,” he wrote earlier this week.
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Plus, Raymond James analyst Srini Pajjuri downgraded AMD’s inventory Tuesday morning, although he remained bullish, decreasing his ranking to outperform from robust purchase.
While he didn’t deal with the upcoming earnings report in his downgrade, he referred to as out “elevated AI revenue expectations” extra usually.
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Source web site: www.marketwatch.com
