Toshiya Hari, an analyst at Goldman Sachs, maintained a Buy rating on Advanced Micro Devices Inc. (NASDAQ: AMD) and increased the price target from $137 to $157.
Hari revised his revenue projections for AMD for 2024 and 2025 by 7% and 10%, respectively, in light of last week’s supply chain inspections, which revealed widespread adoption of the MI300 Data Center GPU in the enterprise and cloud markets.
The analyst now projects that the revenue for Data Center GPUs will amount to $595 million in 2023, $4.0 billion in 2024, and $7.9 billion in 2025.
Hari anticipates an 11% and 12% increase in adjusted EPS (excluding SBC) for 2024 and 2025, from $3.88 and $6.40 to $4.30 and $7.18, respectively, due to higher revenue and gross margin (data center GPUs contribute to corporate gross margins), which are only marginally offset by higher operating expenses.
The analyst foresees AMD’s initial achievements in Data Center GPUs enhancing its server CPU division’s positive outlook for the year (i.e., market recovery and sustained market share gains), which will ultimately result in outperformance in 2024, from a stock perspective.
Hari holds the opinion that Nvidia Corp (NASDAQ: NVDA), AMD, Arm Holdings Plc (NASDAQ: ARM), Broadcom Inc (NASDAQ: AVGO), Marvell Technology, Inc (NASDAQ: MRVL), Credo Technology Group Holding Ltd (NASDAQ: CRDO), and Micron Technology, Inc (NASDAQ: MU) are all strategically positioned to capitalize on the continuous expansion of artificial intelligence infrastructure in data centers.
Hari identifies Western Digital Corp (NASDAQ: WDC), Intel Corp (NASDAQ: INTC), and AMD as the primary beneficiaries of a resumption of PC volume growth within his coverage universe.
A multi-quarter positive EPS revision cycle is anticipated to be driven by strengthening industry supply/demand dynamics, according to the analyst, who maintains a bullish stance on Micron.
