Wells Fargo analyst Aaron Rakers recommended buying shares of Advanced Micro Devices, Inc AMD ahead of this week's Analyst Day.
Rakers anticipated a positive review of the company's product roadmap and technology differentiators. Rakers is betting on the proliferation of Zen chiplet-based architecture, AMD's "X3D" packaging, the evolution of AMD's Infinity Architecture, RoCM + Vitis software integration, and Xilinx's 7nm Versal ACAP ramp, Pensando DPU strategy TAM, and more.
He believes the investors are looking for AMD to provide a long-term (2021-2025) revenue CAGR in the 20%+ range and P&L inputs supporting a path toward $6/share + in EPS by 2025.
Rakers was positive on AMD's ability to continue gaining share in the server and PC CPU markets, increasing traction in datacenter GPUs, accelerating incremental operating leverage, and ultimately earnings power above $6/share by 2025.
With ongoing data center momentum, Xilinx acquisition synergies, and capital return, he believed AMD shares could continue to trade at a relative premium to the SOX.
Ahead of AMD's analyst day, Stifel analyst Patrick Ho expects the company to highlight emerging market opportunities, like the data center, and how this growth will drive additional capacity expansion for foundry/logic devices and other semiconductor products.
Ho, who believes AMD's comments will further support his secular thesis on the semiconductor capital equipment group, reiterates his favorable bias on the group ahead of AMD's event.
He believes leaders in the space, including equipment companies like Applied Materials, Inc AMAT, KLA Corp KLAC, and Lam Research Corp LRCX, will be the largest beneficiaries of data center growth, with MKS Instruments, Inc MKSI to outperform overall industry growth rates.
Price Action: AMD shares traded higher by 0.13% at $106.18 on the last check Monday.
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