Reporting new chips to come out later this year should have been better news for chip stock AMD (NASDAQ:AMD) than it actually was. But word about the state of the market into which it will launch said new chips did it no favors. AMD shares were down nearly 10% as investors suddenly feared for the company.
AMD released word that two new processors would launch this year. Specifically, the Zen 5 Epyc “Turin” and the latest installment of the Ryzen line. That wasn’t all that AMD had in mind, though, as it was also poised to step up promotion on the Instinct MI300, which would give it a better shot of competing against Nvidia (NASDAQ:NVDA), who has taken over a large part of the artificial intelligence (AI) market. Further, the Epyc processors will give AMD an edge in the data center market, and the latest Ryzens will focus on the consumer market, giving AMD a toehold in a wide variety of markets.
A Troubling Market in General
AMD also released word about what the future market is set to look like. The firm reported a 48% drop in gaming revenue in the first quarter of 2024 when measured against the first quarter of 2023 and is looking for the decline to continue, which isn’t out of line. Most have already bought their hardware of choice for the near term. With hardware refreshes still set to come and the next generation of consoles still maybe three years out or so, demand for gaming hardware isn’t going to be brisk.
What Is AMD’s Target Price?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMD stock based on 23 Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 58.38% rally in its share price over the past year, the average AMD price target of $203.96 per share implies 42.4% upside potential.
