Advanced Micro Devices (AMD, Financial) is preparing for a major leap in artificial intelligence (AI), as highlighted by CEO Lisa Su's emphatic dismissal of AI skepticism. In a recent interview with Time, Su described AI as a transformative force, surpassing the impact of the internet, PCs, mobile phones, and cloud technologies. "Having lived in the technology business for the last couple of decades, every ten years or so, we see a major arc in technology," Su stated, underscoring the significance of AI in transforming daily life and business operations.
As AMD is gearing up for its "Advancing AI 2024" event on October 10, where it plans to showcase next-generation technologies and solutions, the anticipation of this event has already boosted its stock. According to a team of Bank of America analysts led by Vivek Arya, AMD's stock has surged by 147% year-to-date and 7% over the past week. The firm already has a "buy" rating and a target price of $180 on AMD stock. Arya highlighted that this superb growth is linked to past performances, where similar AI events have historically led to substantial stock gains ranging from 19% to 80% in the months following.
The upcoming event will highlight AMD's advancements in AI, including its 5th Generation AMD EPYC server processors and AMD Instinct accelerators. It will also focus on networking and AI PC updates, underscoring AMD's commitment to an expansive AI-driven product portfolio.
Despite the bullish backdrop, there are some challenges. The company is currently aiming to capture a significant share of the market, which is already dominated by Nvidia(NVDA, Financial), along with competition from cost-optimized ASICs offered by Broadcom(AVGO, Financial) and Marvell Technology (MRVL, Financial). However, if AMD successfully captures a 10% market share in AI by 2026, as it aims to, this could significantly boost its revenues by an additional $5 billion. This increase could potentially raise its earnings per share to between $8 and $9, surpassing the consensus estimate of $7.37.
As AMD continues its push to redefine its market position through AI innovations, investors and industry watchers are keenly observing whether it can translate these technological advancements into sustained market success.
