AMD Powers Through Challenges with Robust Data Center Expansion
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June 11 - Last month, AMD (NASDAQ:AMD) posted stronger-than-expected quarterly results, beating both EPS and revenue forecasts. The company cited robust demand in its Data Center segment, which saw revenue jump 57% year on year and operating income rise 72%.
Management offered upbeat guidance for the next quarter despite lingering macro challenges, including shifting tariffs and trade tensions. The Data Center unit, crucial to AMD's valuation, could exceed $20 billion in revenue for fiscal 2025, driven largely by AI chip sales.
At its 2021 peak, AMD shares traded above $150; they're near $123 now, having climbed about 2% year to date. While AMD remains second to NVIDIA Corporation (NASDAQ:NVDA) in AI processors, expanding AI revenue share may boost margins and sentiment. New chip launches continue to draw positive third-party reviews.
Analysts project AI chip sales could hit $13$15 billion in 2025, supported by large deals such as a reported $10 billion agreement with a Saudi AI startup. AMD's pricing edge and diversified customers may help narrow the gap with NVDA's leading offerings.
Intel Corporation (NASDAQ:INTC) remains a competitor in CPUs, but AMD's growing server market share underpins a higher valuation multiple. The company also unveiled an additional $6 billion share buyback, bringing total authorization to $10 billion. That may support the stock if AI-driven growth persists amid macro uncertainties.
Is AMD Stock a Buy Now?
Based on the one year price targets offered by 41 analysts, the average target price for Advanced Micro Devices Inc is $129.18 with a high estimate of $200.00 and a low estimate of $95.00. The average target implies a upside of +4.82% from the current price of $123.24.
Based on GuruFocus estimates, the estimated GF Value for Advanced Micro Devices Inc in one year is $165.20, suggesting a upside of +34.05% from the current price of $123.24.
This article first appeared on GuruFocus.