Advanced Micro Devices (NASDAQ: AMD) stock rose 2% in intraday trading Tuesday as Evercore ISI initiated coverage, rating it Outperform.
Evercore ISI, a prominent investment research firm, has initiated coverage on Advanced Micro Devices (AMD), giving it an Outperform rating and a $200 price target. The firm underscores AMD’s strong position in the evolving computing landscape, especially in server CPUs and its MI300 series accelerators.
Evercore ISI Initiates Coverage on AMD
According to Evercore ISI, the shift towards parallel processing could potentially benefit AMD. The company has already made substantial strides in the server CPU market, securing a 20% unit share increase over the past five years thanks to its high-performance products. Evercore ISI anticipates further market share growth for AMD, though possibly at a slower pace. The firm projects the data center processor market to hit $80 billion by 2030, with AMD potentially capturing 20-30% of this market.
The analysts also highlighted AMD’s advancements in the PC CPU space, where it has steadily increased its market share from 8% in 2016 to a projected 19% in 2023. They foresee more growth potential, particularly in high-performance desktops, notebooks, and among enterprise clients. However, they caution that the pace of market share gains may moderate due to heightened competition from rivals such as Intel and ARM-based competitors.
The firm lauded the strategic acquisition of Xilinx in October 2020 as a strategic move with significant long-term potential. Evercore ISI believes the acquisition could yield over $10 billion in revenue synergies, albeit these synergies may not materialize until 2025 due to a current cyclical downturn in the FPGA business. Nonetheless, analysts expect momentum to build through the end of the decade, potentially surpassing the firm’s compound annual growth rate (CAGR) forecast of 17% through 2029.
Evercore ISI sets a $200 price target for AMD, deriving from a 24x price-to-earnings (P/E) ratio applied to their projected 2027 earnings per share (EPS) of $10. This projection is discounted back two years at a 10% rate. The target indicates an expected P/E compression from the current 45x levels.
Advanced Micro Devices (NASDAQ: AMD) Stock Performance
At the time of publication, AMD stock has risen 1.96% compared to the previous trading session and is trading at $163.46. The traders have exchanged hands with 55,193,958 (55.19 million) shares versus the average daily trading volume of 77.05 million.
