Is the Advanced Micro Devices range ready for another series?

Advanced Micro Devices (NASDAQ: AMD) stocks are poised for another rally; just ask investors. They will say yes. The question is whether the company’s stock can rise again, and the answer is also yes. Late in the AI ​​game, AMD AI accelerators are flooding the market and supporting operations in the second quarter. It’s hard to say whether AMD will gain market share as a result NVIDIA (NASDAQ: NVDA) or it will see 200% revenue growth like NVIDIA did, but it will see significant revenue growth this quarter and in the coming years for reasons other than AI.

Artificial intelligence and data center accelerators are in the spotlight among investors, but legacy semiconductor companies still exist. The company’s legacy business has struggled over the past two years due to oversupply, inventory reduction and end-market normalization, but normalization has already arrived. With the consumer and data center segments growing at an 80% rate, ending the shrinking gaming and embedded markets is enough to ensure significant revenue acceleration and legacy businesses to return to growth in 2025.

The long-term prospects for the development of artificial intelligence also need to be taken into account. The embedded and gaming segments are in decline today, but will soon return to growth and engage in a secular modernization cycle that could last more than a decade. Artificial intelligence starts in the data center but is moving towards the edge of computing and the Internet of Things, which will drive embedded business for the next decade.

Analysts favor AMD: the top pick among large-cap chip stocks

Analyst activity in the second quarter is mixed, with numerous price target cuts offsetting price target increases and increases. The bottom line is that some analysts are shortening targets, but the scope of the group is narrowing as consensus increases and they see shares of that group rising.

A significant number of analysts cover the stock exchange, so confidence is high and activity leads the market to growth. The consensus is a strong Buy; the thirty analyst consensus is up 50% from last year and $5 over the last 30 days, suggesting a likely move to the high end range. Reaching the consensus puts the market for this stock near an all-time high; a move towards the upper range would mark a new high.

The latest update comes from Piper Sandler, who maintains her Overweight rating and $175 price target. The company selected AMD as its top pick among large-cap chip stocks for the second half, citing growing MI-300 supply and a slate of new chips expected to launch later this year, next year and in 2026. These include, among others: updated versions of the MI-300 and the second and third generation AI platforms, MI350 and MI400, which will compete with NVIDIA’s Blackwell and Ruben architectures.

Advanced valuation of micro devices without worrying about the forecast growth

Advanced Micro Devices is trading at a relatively high earnings estimate of more than 45 times this year, but that’s not a problem for investors. The growth outlook significantly lowers this figure as early as next year, bringing it down to a more reasonable range near 27x. As economic growth is expected to remain strong through 2026, the valuation continues to decline, putting this company in high-value territory. Assuming a 30x valuation for top tech leaders, this market could rise $17 to a multi-month high through simple expansion based on price multiples, with upside risk remaining. AMD is likely to outperform the consensus estimate reported by MarketBeat and raise guidance, increasing leverage for potential valuation gains.

The technical performance is promising. The AMD stock market reached a new high in early 2024 and corrected to confirm support at previous levels. The market is currently showing increasing support at a critical level, supported by indicators. MACD has a stochastic trend; momentum has not returned to bullish behavior yet, but stochastic is sending a solid market entry signal that is trending up and has room to run further. In such conditions, AMD shares could soon rebound to $175 and to $200 by the end of the year, with a chance to reach new record highs in 2025.

Source: MarketBeat