Overview
Advanced Micro Devices Inc. (AMD) is set to release its earnings after the closing bell on Tuesday. Analyst Srini Pajjuri from Raymond James, while still bullish on the stock, has revised his rating from "strong buy" to "outperform." In his analysis, Pajjuri emphasizes the "elevated AI revenue expectations" in the industry, without specifically focusing on AMD's upcoming report.
Revised Rating and Price Target
Pajjuri has adjusted his rating on AMD to "outperform." Although he remains optimistic about the stock, this change indicates a slightly more moderate stance. Furthermore, he has raised his price target to $195 from $190 in his latest note. This new target suggests a potential increase of less than 10% from the current price levels.
Expectations for AMD vs. Competitors
Pajjuri highlights that AMD has already secured three major cloud or hyperscale clients for its artificial-intelligence graphics processing units. These customers include Microsoft Corp., Meta Platforms Inc., and Oracle Corp. In comparison, the dominant market leader, Nvidia Corp., has reportedly shipped around 900,000 units to these clients throughout 2023.
On Wall Street, projections indicate that AMD may ship between 250,000 and 500,000 units this year. If these estimates are accurate, it would imply a corresponding market share of 15% to 25% for AMD.
Conclusion
As AMD prepares to release its earnings report, market analysts are adjusting their assessments. While maintaining a positive outlook overall, Pajjuri's rating change reflects the industry's high expectations for AI revenue growth. With notable developments in securing major clients and competing against Nvidia, AMD's performance in the coming months will undoubtedly be closely monitored.
