AMD's Stock Near-Term Correction Is A Buying Opportunity: Goldman Sachs Analyst

Goldman Sachs analyst Toshiya Hari maintained Advanced Micro Devices Inc AMD with a Buy and raised the price target from $157 to $180.

On Tuesday, AMD reported fourth-quarter revenue of $6.2 billion (+6% quarter-on-quarter, +10% year-on-year), 1% above the analyst and the Street consensus. The adjusted EPS of $0.77 was 6% below Hari’s estimates but broadly aligned with Street consensus.

The analyst expects significant weakness in AMD’s Gaming business to drive negative revisions to Street estimates. 

However, Hari is encouraged by the ongoing customer traction in the Data Center GPU business, as evidenced by the positive revision to management’s full-year revenue guide from $2 billion+ to the new guide of ~$3.5 billion. 

Importantly, from a stock perspective, Hari noted that the Data Center matters most given the segment’s above-average growth potential and gross margin profile. 

The analyst noted a near-term correction in the stock as an opportunity to add exposure to an asset that has growing exposure to generative AI and the build-out of its infrastructure, continued potential to grow market share in server CPU, and significant run-way ahead in terms of margin expansion and earnings growth.

The analyst flagged strong customer traction in MI300, server CPU share gains, and forward gross margin trajectory as critical positives.

AMD expects first-quarter revenue of $5.4 billion at the mid-point (-13% Q/Q, +1% Y/Y), which was 5% below prior Hari’s estimates and 6% below prior Street consensus.

Hari projects first-quarter revenue of $5.67 billion versus a consensus of $5.73 billion.

Price Actions: AMD shares traded higher by 1.21% at $169.72 on the last check Thursday.

Also Read: Analysts Eye AMD and Nvidia’s AI Rivalry: Who Leads the Tech Race?

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