Justin Sullivan
UBS raised price target of Advanced Micro Devices (NASDAQ:AMD) to $220 from $135 ahead of the company’s quarterly results next week.
AMD’s stock has risen about 2% premarket on Thursday.
The firm also raised its price target on Microchip Technology’s (NASDAQ:MCHP) shares to $105 from $90.
Advanced Micro Devices (AMD): The analysts said that tactical setup around earnings is complicated somewhat by the stock’s recent rally, but nonetheless, they are more confident on AMD’s data center GPU revenue opportunity and significantly raised their CY24/CY25 estimates and priced target to $220.
The analysts noted that recent channel and customer checks confirmed their view that AMD has a firm demand commitment for about 400K+ MI300A/X units for C2024.
This is a number that is fairly consistent with where the analysts have seen demand since last summer but they have been wary of double ordering and unsure of supply.
The analysts added that after having gone back to several customers and suppliers, they are more confident that these units are real and AMD now has sufficient Chip-on-Wafer-on-Substrate, or CoWoS, capacity to do over 10% the volumes of Nvidia (NVDA).
Even assuming a very conservative ASP (which could be as high as $20k+ for some customers), this suggests $5B for data center GPU is a pedestrian target for this year and even this implies that AMD exits the year at a run-rate which could be close to $10B per year with AMD still likely to grow GPU units quarter-over-quarter through much of 2025, the analysts added.
UBS now sees Advanced Micro Devices (AMD) annualizing $6 plus in EPS exiting this year and pushing $8 annualized once it gets to the second half of 2025.
The analysts added that on the back of their higher estimates, they raised their price target to $220 based on 31x CY25 EPS and still think that the stock can keep marching higher this year.
AMD is scheduled to report its fiscal fourth quarter results on Jan. 30. Meanwhile, Microchip Technology (MCHP) is slated to report its fiscal third quarter results on Feb. 1.
Advanced Micro Devices (AMD) has a Hold rating at Seeking Alpha’s Quant Rating system, which consistently beats the market. Meanwhile, the Seeking Alpha authors’ average rating is more positive with a Buy and so is the average Wall Street analysts’ rating, Buy.
