Investment firm Raymond James has initiated coverage on Advanced Micro Devices, Inc. (NASDAQ:AMD) with an “Outperform” rating and a price target of $337.00. This assessment, announced on November 20, 2023, highlights AMD’s promising position in the artificial intelligence (AI) sector, particularly due to its projected $15 billion AI pipeline by 2026.
Analysts at Raymond James note that AMD stands to benefit significantly from recent deployments of its graphics processing units (GPUs) by OpenAI, which may enhance both GPU adoption and market share. The firm believes that AMD is well-equipped to compete with industry leader NVIDIA in the GPU market, expecting “continued momentum” in their offerings related to accelerators and AI rack systems.
AMD’s Competitive Edge and Market Potential
As a prominent vendor of central processing units (CPUs), accelerated processing units (APUs), and GPUs, AMD is actively innovating across various segments, including consumer and data center markets. The analysts emphasize that despite lingering investor skepticism, AMD’s shares are attracting a more diverse audience compared to previous years.
The recent contracts with OpenAI and Humain, which are expected to yield around 1 gigawatt of power, could contribute significantly to this projected revenue, potentially reaching over 2 gigawatts in 2027. These advancements position AMD favorably for ongoing gains in both server and personal computer (PC) markets.
According to the analysts, while AMD’s fundamentals currently need to catch up, they express confidence that they will. The firm forecasts sales of approximately 190,000 MI350 chips and 915,000 MI450 chips in fiscal year 2027, reaffirming their outlook for sustained market share growth.
AI Market Landscape
The analysts argue that the total addressable market (TAM) for AI is substantial enough to accommodate multiple chip suppliers, with AMD expected to be a key participant. This assertion is bolstered by the anticipated endorsement of AMD products through OpenAI deployments, which could encourage additional model builders and hyperscalers to adopt AMD’s offerings.
While there are inherent risks associated with investing in AMD, the firm maintains that some AI stocks present greater potential for higher returns over a shorter time frame. The outlook for AMD remains optimistic, underscoring the company’s strategic initiatives to harness the burgeoning AI market.
In summary, Raymond James has positioned AMD as a strong contender in the evolving AI landscape, with a clear projection of significant revenue growth through strategic partnerships and product innovations.