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Shares of Advanced Micro Devices (NASDAQ:AMD) fell about 5% premarket on Wednesday after its quarterly results and guidance, which largely saw positive reactions from analysts.
Benchmark reiterated its Buy rating on AMD and raised the price target on the stock to $210 from $170.
Analyst Cody Acree said AMD delivered a strong second quarter, with revenue of $7.685B, up 32% year-over-year and 3% quarter-over-quarter, and a solid $270M upside to Street expectations of $7.415B, and gave an equally encouraging third quarter outlook for $8.7B, up 13% quarter-over-quarter and up 28% year-over-year with an even larger $377M upside versus the consensus of $8.323B, even when considering the projected $1.5B of lost revenue over the two quarters from the heightened export restrictions of AMD’s and Nvidia’s (NVDA) AI accelerators.
Acree noted that “the company’s recent strong stock gains, with AMD up 26% in the last month and 56% in the last six months, we believe investors and traders were poised to lock in short-term profits, almost no matter what AMD said.”
The analyst said that AMD’s second quarter revenue strength was driven by record sales on consistent market share gains of EPYC server CPUs and Ryzen client CPUs, in both the AI and traditional enterprise markets, plus heavily supply constrained Radeon Desktop GPUs, the first time we have seen AMD’s Gaming GPUs see this level of demand in quite some time, and finally higher semi-custom game console shipments, as inventories have finally troughed in this market and console makers restocked in preparations for the holidays.
“For Q3, AMD’s growth is expected to be driven by a strong double-digit increase in the Data Center, particularly as MI350 ramps, plus continued strength in EPYC CPUs and mid-single digit sequential gains in Client, and a return to growth in Embedded, while Gaming is expected to be flat Q/Q, which implies the combined Client & Gaming segment will be up modestly in Q3,” said Acree.
KeyBanc maintained its Sector Weight rating on AMD.
Analysts led by John Vinh said AMD posted strong top-line second quarter results and third quarter guidance (revenues were above while EPS was in line due to higher Opex). The second quarter upside was driven by server and gaming, while the third quarter upside is being led by a strong ramp of MI355, while server CPU is also expected to grow double digit percentage quarter-over-quarter.
AMD noted the second and third quarters do not include any contribution from MI308, as it still awaits approval to ship to China, the analysts added.
“We’re encouraged by these results and the strong ramp of MI355,” said Vinh and his team.
Oppenheimer kept its Perform rating on AMD’s stock.
“AMD reported upside results and outlook Tuesday. 2Q sales topped Street by 4%,” said analysts led by Rick Schafer. The analysts added that AMD’s entry into rack-scale is on track for the next year with the launch of MI400.
However, the analysts noted that they remain sidelined until the path to sustained upside becomes clearer.
Meanwhile, Mizuho raised the price target on AMD’s stock to $183 from $175.