Advanced Micro Devices launches new AI initiatives, analysts remain cautious

Analysts are placing AMD's recent announcement in the spotlight, closely scrutinizing the semiconductor giant's growth ambitions. At its "Advancing AI 2024" event in San Francisco, the company unveiled new high-performance computing solutions that aim to shape the era of AI computing. These include the 5th generation EPYC server CPUs, the AMD Instinct MI325X accelerators, and Ryzen AI Pro 300 processors for PCs. Company CEO Lisa Su announced that the MI325X will be shipped by the end of the current quarter and is expected to be incorporated into partner products early next year. In an extended forecast, AMD sees the addressable market for data center AI accelerators rising to over 500 billion USD by 2028, up from 45 billion USD in 2023. Despite the optimistic outlook, according to expert Helene Meisler, the development of AMD's stock remains relatively stagnant year-on-year. Despite positive performance in Friday trading, significant catalysts are lacking to reach the levels of the springtime highs. Reactions from the investment world are mixed. Wedbush highlights the opportunities with a price target of 200 USD and maintains an Outperform rating, while Oppenheimer offers a more sober analysis, finding no significant surprises in AMD's product roadmap. Despite advancements in AI, actual revenue growth lags behind expectations, as noted by Oppenheimer. Bank of America Securities points out the performance lag of the new MI325X compared to Nvidia's Blackwell. With rising price targets of 200 USD, Piper Sandler emphasizes a positive view on AMD, particularly due to the increased expectations for the AI marketplace. They position AMD as a key player in the data center market and favor the stock as a leading large-cap.