Advanced Micro Devices is getting more positive commentary from Wall Street, as Wells Fargo reiterated its overweight rating and $180 price target, as the investment firm believes shares are discounting the company's earnings potential over the next three to five years.
Analyst Aaron Rakers noted that AMD has consistently posted strong results over the past year and is likely to keep taking market share over the next five years, while growing its total addressable market, which could boost earnings to $6 per share by 2025.
"With an expectation that the PC CPU market will sustain a structurally higher post-COVID TAM (est. a ~$40B TAM), an estimated mid/high-single digit CAGR in AMD's data center TAM [CPU + GPU], and with the inclusion of a ~$8.5B incremental TAM via Xilinx, we estimate that AMD now addresses a $100B-110B+ TAM (vs. $79B TAM outlined at March '20 Analyst Day)," Rakers wrote in a note. He added that AMD is likely able to grow revenue at a 15% compound annual growth rate over the next several years and with more tailwind in data centers and Xilinx coming into the fold, helping gross margins, AMD's (AMD) gross margins can reach into the mid-50s over the next "few years," Rakers explained.
In addition to Rakers' positive comments, KeyBanc upgraded Advanced Micro Devices (AMD) on Tuesday due to growth in data centers, with the investment firm saying the segment should be "robust" this year.
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