AMD Soars on Data Center and AI Chip Demand, Though Gaming Weakness Persists
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AMD's data center segment is outpacing expectations, driven by strong demand for its new Instinct MI300 GPUs and EPYC CPUs. The MI300 accelerators are gaining share vs Nvidia in AI workloads.
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AMD's client/PC segment is recovering and expected to benefit from emerging demand for AI-enhanced consumer devices like laptops. Its new Ryzen 8000 chips target this market.
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Margins are forecasted to expand in 2H2023 as higher priced data center products like the MI300X ramp up shipments. Gaming weakness persists near-term.
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AMD's stock price target is $202 based on a DCF analysis that factors in AI-driven TAM expansion. Upside potential exists if execution continues.
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Key downside risks are China-U.S. tensions and a potentially slower recovery in PCs/gaming, but these are not expected to structurally impact the bull case.