Semiconductor Giant’s Stock Performance Trails Behind Competitors
Advanced Micro Devices, Inc. (AMD), headquartered in Santa Clara, California, specializes in semiconductor products and devices. With a market capitalization of $240.1 billion, the company’s offerings include microprocessors, embedded microprocessors, chipsets, graphics, and multimedia products. AMD also provides services like assembling, testing, and packaging to third-party foundries.
Over the past year, AMD shares have not performed well in comparison to the broader market. While AMD’s stock has increased by 24.3%, the S&P 500 Index ($SPX) has surged nearly 35.9% during the same period. As of 2024, AMD’s stock is down slightly, contrasting sharply with the SPX’s impressive 25.8% year-to-date rise.
When examining performance against the iShares Semiconductor ETF (SOXX), AMD’s struggles become even more evident. This ETF has appreciated about 36.8% over the last year, and its 17.5% year-to-date gains far surpass AMD’s losses.
Concern among investors regarding AMD’s position in the global AI market has emerged, particularly about the company’s ability to secure a significant market share in a competitive environment. While AMD management has ambitious growth targets for its data center GPU segment in the AI accelerator market, a modest revenue guidance increase to $5 billion for 2024 has left investors doubtful about the current strength of its AI business.
On October 29, shares of AMD rose over 3% following its third-quarter results. The company reported an adjusted EPS of $0.92, beating Wall Street’s expectation of $0.91. Additionally, revenue reached $6.8 billion, surpassing the forecast of $6.7 billion. Looking ahead, AMD anticipates revenue for the fourth quarter to fall between $7.2 billion and $7.8 billion.
For the fiscal year ending in December, analysts project AMD’s EPS to grow by 27.1% to $2.53 on a diluted basis. AMD has a solid history of earnings surprises, outperforming consensus estimates for the last four quarters consistently.
Among the 38 analysts tracking AMD, the overall rating is a “Strong Buy.” This consensus stems from 31 “Strong Buy” ratings, one “Moderate Buy,” and six “Holds.”
The analysis has remained consistent over the last three months. On November 6, analyst Jonathan Woo from Phillip Securities reaffirmed a “Buy” rating on AMD, setting a price target of $170, which suggests a potential upside of 15.4% from current levels.
The average price target amongst analysts is $190.81, indicating a 29.5% premium to AMD’s current price. Notably, the highest target of $250 implies an ambitious upside potential of 69.7%.
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On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
