Advanced Micro Devices (NASDAQ:AMD) stock is a beneficiary of the jump in demand for chips that drive AI (Artificial Intelligence) applications. Thanks to the growing enterprise applications of generative AI and investors’ positive outlook, AMD stock has risen nearly 74% year-to-date. While the stock has appreciated quite a lot, the consensus price target from analysts suggests that AMD stock could extend gains in the coming days.
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AI Opportunity Could Push AMD Stock Higher
Nvidia (NASDAQ:NVDA), with its flagship Hopper and Ampere architecture GPUs (Graphics Processing Units), continues to dominate the AI space. However, AMD, with its innovative products, including the recently announced MI300X GPU for AI, could meet the growing demand for AI applications.
On June 16, Morgan Stanley analyst Joseph Moore raised AMD’s price target to $138 from $97 and reiterated the Buy recommendation on the stock. While Moore places Nvidia as the “Top Pick” in the semiconductor sector, the analyst sees significant AI-led growth opportunities for AMD in 2024.
Speaking about AMD’s new dedicated generative AI product, Goldman Sachs analyst Toshiya Hari said that he is waiting for “tangible evidence of customer design wins with MI300A and/or MI300X.” The analyst added that “AMD’s efforts in providing a GPU-only solution that is comparable to that of Nvidia provides a minimum, some optionality for customers.”
In a note dated June 14, Hari maintained his Buy recommendation on AMD stock and increased the price target to $137 from $97.
What is AMD’s Price Target?
AMD is expected to benefit from meaningful AI revenue starting in the fourth quarter of this year. Also, it is likely to benefit from its Zen 4 EPYC CPU portfolio. However, near-term macro uncertainty keeps analysts cautiously optimistic about its prospects.
AMD stock has received 21 Buy and eight Hold recommendations for a Moderate Buy consensus rating. These analysts’ average price target of $134.31 implies 20.74% upside potential from current levels.
Investors should note that Matt Ramsay of TD Cowen is the most accurate analyst for AMD stock, according to TipRanks. Copying Ramsay’s trades on AMD stock and holding each position for one year could result in 86% of your transactions generating a profit, with an average return of 58.5% per trade.
