by Despite the difficult background provided by 2H22 and reflected in the PC inventory count, Advanced Microdevices (NASDAQ:AMD) navigated the rough terrain quite well.
Ahead of the chip giant’s Q4 (January 31) fiscal profit, Mizuho analyst Vijay Rakesh estimates full-year 2022 results should show 43% year-over-year growth, boosted by strong data center performance (DC), which sees Rakesh climbing 60% higher y/y. This equates to a “significantly better” performance than competitor Intel with its DC “potentially flat” year on year.
In fact, after the PC challenges in the September quarter where Intel lost market share, AMD appears to have regained share in the fourth quarter, with the rise of the Ryzen 7000 desktop processors boosting earnings. And while on PC the company expects another soft year (possibly down 5-10% year-over-year), Rakesh thinks AMD is “well-positioned with new Ryzen products and secular long-term trends in PC gaming.”
Moving on elsewhere, the 5-star analyst thinks AMD “has benefited from improving server market share and should continue to see good slopes in 2023E with its long-awaited 5nm Genoa product line.” The 5nm Genoa – the new range of server CPUs – should provide a “significant tailwind” to Intel, given that the “competitive” 10nm++ Sapphire Rapids offering will not increase until 2H23E. There’s also the expected emergence of the company’s 5nm Bergamo cloud-optimized CPU in the second half of the year to look forward to.
And while the Xilinx deal, which closed in early 2022, should only prove to be “neutral” on revenue, the planned FPGA computing roadmap offers a “compliment” to AMD’s CPU roadmap.
Finally, addressing the recent announcement of the retirement of CFO Devinder Kumar – who was instrumental in AMD’s strong growth – Rakesh allays investor fears by noting that successor Jean Hu does not only have a background in engineering , but has served as Marvell’s CFO since 2016. “solid CFO experience.”
Based on the above, Rakesh assigns AMD its top pick for 2023 and rates it as a buy. In addition, the 5-star analyst sets a price target of $95 on AMD, implying 26% upside potential. (Click here to view Rakesh’s track record)
Most analysts share the same sentiment; the stock’s Strong Buy consensus score is based on 18 Buys vs. 6 Holds. The forecast calls for a 12-month gain of ~13%, taking into account the $85.09 average target. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the recommended analyst. The content is for informational purposes only. It is very important to do your own analysis before making an investment.
