AMD Remarkable Surge: AMD’s stock soared by more than 9% on Wednesday, following the company’s impressive performance, surpassing both revenue and earnings expectations and presenting a promising 2024 outlook for its artificial intelligence chip business.
The chipmaker’s reported earnings per share of 70 cents, adjusted, slightly exceeding the LSEG’s estimate of 68 cents per share. Similarly, the revenue also marginally surpassed expectations, amounting to $5.8 billion compared to the projected $5.7 billion.
One statement particularly caught the attention of Wall Street: AMD’s CEO Lisa Su revealed that the company anticipates approximately $400 million in GPU revenue for the fourth quarter and aims to surpass $2 billion in 2024. This optimistic forecast spurred a rally in the stock’s value on Wednesday.
Analysts on Wall Street are optimistic about AMD’s position in the AI market, which is currently dominated by Nvidia. AMD stands out as one of the few companies capable of producing high-powered graphics processing units vital for fueling AI models.
Bank of America analysts noted, “Upcoming MI300 accelerator is guided to $400mn sales in Q4E and $2bn+ in CY24E, with healthy traction across hyperscalers, enterprises, OEMs, and AI startups.” AMD confirmed that its new MI300A and MI300X GPUs are scheduled for mass production during the fourth quarter of this year.
Raymond James analysts adjusted their price target from $145 to $125 but maintained AMD as a “strong buy,” primarily due to its promising AI business. They remarked, “We are lowering our estimates but continue to like the story due to long-term AI/ML potential. AMD is off to a solid start, and we see no reason why the company can’t capture 10–20% share of the $100B+ AI accelerator market longer term.”
Jeffries analysts echoed a similar sentiment regarding AMD’s GPU business. They highlighted, “Perhaps the best news on the earnings call was that AMD now expects its data center GPU family (MI300) to generate $2 billion in revenues in 2024 (we believe Street was at $1bn-$1.5bn), starting at $400m in both 4Q23 (HPC) and in 1Q24 (inferencing + training).”
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