'Load Up Before Earning' Says Harsh Kumar About AMD Stock – TipRanks.com

Several exciting quarterly reports are on deck this week, too AMD's (NASDAQ: AMD ) stands out as one of the most curious. AI mania has been all the rage lately, AMD stock has failed to capitalize on the big trend in 2024. The reason? Many believe that while AMD's AI chips are powerful, they simply don't measure up to Nvidia's dominance in the field.

But it wouldn't be wise to write off the semi giant just yet, said Piper Sandler's Harsh Kumar, a 5-star analyst rated in the top 1% of stock professionals on the Street. In fact, ahead of Tuesday's earnings, Kumar continued to view AMD as “our top large-cap pick.”

Kumar's positivity is partly based on AMD's comments about its GPU outlook with the possibility of MI300 adoption setting the scene for “outperformance in the data center segment.”

Many investors have highlighted $5 billion as an annual revenue target for its GPUs, but looking ahead to December guidance, Kumar thinks AMD will exceed that target, based on the “implied GPU ramp.”

And over the next year, buoyed by better rack-level performance, improved supply, and increased adoption of the MI300 and MI325, Kumar expects AMD to hit the next milestone of $10 billion+ in GPU revenue.

The analyst also believes that AMD faced “significant supply constraints” in the first half of the year, with limited traction, as several customers were just starting to test the MI300. But now, with the MI325 on the way and a “more optimized supply chain,” AMD's momentum in this area looks set to pick up. As Kumar highlighted earlier, with the introduction of the MI325, the momentum “seems to be wider” than the MI300.

As for the idea that AMD would be able to mount a serious challenge to its dominance far behind Nvidia, Kumar poured cold water on the idea. “All in all,” he summarized, “AMD has taken some important software/model transformation steps to close the gap with the competition. We feel that with the closing of the ZT System deal in 1H25, AMD will close another gap to NVDA in rack level performance.”

To that end, Kumar rates AMD shares an overweight (ie, buy) with a $200 price target, suggesting the stock could rise 26% in the months ahead. (To view Kumar's track record, click here)

Overall, most Wall Street analysts support AMD, with 25 out of 31 recent ratings recommending a buy, resulting in a strong buy consensus. The average price target stands at $188.96, implying a return of ~18% over the next year. (See AMD stock forecast)

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Disclaimer: The views expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.