Advanced Micro Devices Inc. (NASDAQ:AMD) is among the most fantastic stocks every investor should pay attention to. The company held its Analyst Day on November 11, where it provided an update on its long-term growth outlook.
The management anticipates revenue growth at a compounded annual growth rate (CAGR) of over 35% for the next three to five years, driven by momentum in the data center sector and market share gains. Within that, the data center business is expected to experience an accelerated growth, with a CAGR of over 60%, higher than approximately 52% seen between 2020 and 2025. The core business is expected to continue growing at a moderate rate of 10%. Over the same period, AI data center revenue is expected to increase by an average of 80%.
Regarding profitability, the gross margin is expected to average around 55% to 58% during this 3- to 5-year period. The operating margin is expected to exceed 35%, and adjusted EPS is expected to exceed $20.
In her address, Lisa Su, Chair & CEO of AMD, projected the total AI chip market, including accelerators, processors, and networking products, to reach $1 trillion by 2030.
At the time of writing this article, Mizuho Securities analyst Vijay Rakesh had raised his price target to $285 from $275 and reaffirmed his Buy rating following the event.
Ahead of the Analyst Day, Advanced Micro Devices Inc. (NASDAQ:AMD) had experienced heightened analyst activity, with several firms issuing fresh updates and commentary.
Among them, Bank of America analyst Vivek Arya had maintained a Buy rating on AMD with an unchanged price target of $300 as of November 10.
The analyst was quite upbeat about the event, as he believed it could bring more clarity on the AI chip development timelines and the company’s plan for earnings growth. Arya had raised his estimates for the AI accelerator market and expected it to reach $750–$850 billion by 2029-2030. Moreover, he believed that AMD’s EPS could reach as much as $15 to $18 by 2030. He was also expecting the company’s management to guide for sales growth of 25%-30% per year and gross margins of around 53%-55% at the analyst day.
However, we see that the company has given an outlook that exceeds its estimates on almost all parameters. At the time of writing this article, Arya hasn’t published any notes on the event. However, his estimates and price target may change if he writes another update factoring in these insights from the management.
Advanced Micro Devices Inc. (NASDAQ:AMD) is a leading semiconductor company specializing in high-performance computing and graphics solutions. Its broad product portfolio includes microprocessors, graphics processors, and system-on-chip (SoC) solutions designed for data centers, gaming, and embedded systems.
While we acknowledge the risk and potential of AMD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMD and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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