Despite Mixed Market Trends, AMD Receives Strong Support from Analysts Ahead Of Q3

Rosenblatt analyst Hans Mosesmann reiterated a Buy rating on Advanced Micro Devices, Inc AMD and a price target of $200.

The analyst expects AMD to deliver in-line 3Q23 earnings results on mixed-end market trends with more robust data center and PC CPU dynamics, offset by weaker enterprise, embedded, and PC gaming.

Mosesmann sees a more robust 4Q23 outlook above consensus expectations as data center CPU share gains continue to accelerate (amid inventory normalization), a return to gaming seasonality that offsets embedded weakness and console weak seasonality.

Mosesmann expects AMD to strike a bullish posture in all strategic product areas, including the new MI300A/X APU/GPU compute accelerators, which he sees as much more competitive than the Street believes. 

AMD is installing MI300A into the El Capitan supercomputer for the LLNL and the MI300X (sampling) to ramp early in 2024 in volume in the discrete GPU accelerator segment vs. Nvidia Corp NVDA Hopper and Intel Corp INTC Gaudi 2/3.

AMD remains a top 3 pick for the analyst.

Raymond James analyst Srini Pajjuri reiterated a Strong Buy with a price target of $145 on server gains, solid execution, and long-term AI opportunity.

He expects a slight upside to 3Q and is mainly in line with the consensus 4Q outlook. 

Pajjuri notes that the PC tracked slightly better, and the Data Center tracked in line. He is modeling a $300 million - $400 million contribution from MI300 GPU in 4Q, primarily from the El Capitan supercomputer, a one-time project. 

As such, the consensus estimate for a low single-digit Q/Q decline in 1Q24 in DC revenue could prove aggressive. 

Pajjuri flags that MI300X GPU for Gen AI will likely launch in 4Q and believe AMD is working with Microsoft Corp MSFTMeta Platforms Inc META, and Amazon.Com Inc AMZN

The analyst is conservatively modeling <$1 billion revenue from MI300X in 2024. 

The analyst has conviction in AMD capturing a 10% - 20% share of the Inferencing market more extended term, implying mean multi-billion dollar revenues and accretive margins. 

In other segments, Embedded faces a cyclical correction in the second half of 2023, while console demand appears slightly better.

KeyBanc analyst John Vinh reiterated an Overweight and a price target of $160 on AMD.

The analyst expects AMD to post in line with slightly higher results and marginally lower guidance due to a slight delay for the MI300A ramp. 

Results will likely reflect improving PC demand, troughing server demand, and normalizing Milan inventories at CSPs. 

Vinh sees moderate risk to 4Q guidance given some volume pushout of MI300A at HP/El Capitan but does expect this project to ramp in 4Q. 

Additionally, he saw signs of a more moderate ramp of Genoa, as some customers have pushed out the timing of their ramps.

Vinh projects 3Q23 revenue and EPS of $5.71 billion and $0.69 vs. consensus estimates of $5.70 billion and $0.68.

BMO Capital analyst Ambrish Srivastava reiterated an Outperform on AMD, lowering the price target to $140 vs. $150.

For 3Q23, the analyst modeled AMD to report revenues of $5.70 billion and EPS of $0.68.

While for the overall top line and EPS for AMD, the PC business could provide a nearer-term lift to estimates, and overall numbers for 4Q23 and 2024 could come closer to consensus vs. the analyst's, he notes there is downward bias to consensus estimates for Data Center. 

Srivastava notes that estimates for Data Center 2024 are ~$1 billion higher than his estimates and slightly higher than his for 4Q23. 

The analyst's recent work along the supply chain is more supportive of his estimates for that particular segment.

Price Action: AMD shares traded lower by 0.30% at $96.15 on the last check Monday.

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