AMD is becoming 'closest competitor' to Nvidia in AI hardware, and that could extend stock's rally
Advanced Micro Devices Inc. is poised to capitalize on the wave of interest around artificial intelligence, and that has one analyst taking a rosier view of its stock.
It "now appears more certain that AMD has established itself as the closest competitor to [Nvidia] in the accelerator/AI hardware market with apparent traction now extending beyond supercomputing into hyperscale," Wedbush analyst Matt Bryson wrote Monday.
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He noted that AMD AMD, -2.67% is "now seemingly gaining acceptance at a hyperscale customer," moving the company beyond the high-performance-computing arena and helping to warrant a higher valuation for the stock.
Bryson lifted his price target on AMD's stock to $145 from $95 in his latest note to clients, writing that the new target implies an $80 billion valuation for AMD's data-center graphics processing unit (GPU) business, "a reasonable valuation for the candidate emerging as the most likely [second] source" to Nvidia Corp. NVDA, +2.54% .
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His note comes ahead of a Tuesday event during which AMD executives will discuss the data-center business and AI applications.
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"We expect management will be upbeat regarding AMD's datacenter prospects (in the [second half] and into 2024) driven by new compute and acceleration products; however, we would also be surprised if any of the information that is outlined is unexpected," Bryson wrote.
More interesting than the technology itself is the potential for financial benefits from it, but those questions are "far less likely to be answered," in his view.
He remains bullish on the stock with an outperform rating, writing that AMD also seems on track to pick up share in the market for data-center CPUs, or central processing units.
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Shares of AMD are ahead 3% in Monday's premarket trading. They have advanced 93% so far this year.