$AMD Will it move back to $200+ Next year?
So many people have been quick to count out $Advanced Micro Devices(AMD)$ due to its lackluster performance this past year but I believe IT WILL outperform many other chip stocks next year. Smart money will buy up this stock starting next month. There's a key level to watch that will trigger more buyers to step in.
Technical Setup: AMD has trended lower the past 10 months after topping out at 227 on 3/08/2024. Currently AMD is forming a bottom above 116, If it can get through a key resistance at 128 we will see a sustained move to the upside to 145 next. This 145 level will trigger a multi week rally setting us up for a retest of ATHs at 227.
Earnings Highlight: Reported Q3’24 earnings on 10/29 with revenue of $6.8 billion, up 18% YoY, with a 50% gross margin. The strong performance can be attributed to their Data Center segment which grew ~120% YoY. Q4’24 revenue projections are currently set at $7.5 billion. Current estimates are suggesting 27% growth in revenue and 25% increase in earnings for FY’24; if we see AMD hit above those targets it will be a catalyst for AMD to move higher.
Data Centers: AMD’s EPYC processors have been deemed better than Intel’s. Why? AMD’s processors price to performance ratio (cores and cache per dollar) is higher compared to Intels. You are able to achieve high performance while being power efficient at a lower cost compared to Intel’s. We are seeing major companies such as Microsoft, Amazon, and Google start to adopt AMD chips for their data centers. This trend is likely to continue and increase heading into 2025.
AI Revolution: Explosive growth in AI and machine learning is driving demand for high-performance GPUs. AMD's MI300 GPUs offer competitive computational efficiency and cost-effectiveness, making them a strong option for enterprises managing budgets. With growing partnerships in cloud and data centers, $AMD is positioning itself to capture market share in the AI space, challenging $NVDA's dominance. Nvidia currently holds about 88% of the discrete GPU market while AMD holds the remaining 12%. We will likely see AMD increase its footprint in the coming year to about 15-18% as their GPU chips are a strong competitor to Nvidia's more expensive offerings.
With AI, data centers, and gaming markets aligning for exponential growth, AMD is poised to rebound. Smart money isn't ignoring this name, neither should you.
My conservative price target for AMD is 250 by the end of 2025.
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