AMD Shares Gain on Analyst Optimism Ahead of Earnings, Fueled by CPU Strength and China Sales
Shares of Advanced Micro Devices (NASDAQ: AMD) advanced on Monday, buoyed by an upbeat assessment from Wall Street ahead of the company's fourth-quarter earnings report scheduled for Tuesday. The stock closed the session up approximately 4%.
In a note to clients, Wedbush analyst Matt Bryson struck an optimistic chord, arguing that AMD's investment thesis does not hinge on overtaking its dominant rival, Nvidia, in the market for advanced AI chips. Instead, Bryson emphasized the strength of AMD's core business in central processing units (CPUs) for both personal computers and, more critically, data center servers.
"The narrative around AMD has become overly fixated on the AI accelerator race," Bryson wrote. "While that's a significant long-term opportunity, the near-term engine is their server CPU division. Tight supply conditions are allowing them to secure favorable pricing, which should be a clear tailwind for margins." He noted that server CPUs already rank among AMD's most profitable products.
Bryson also identified recently authorized chip sales to China as another potential catalyst for growth, following regulatory approvals granted in January. He maintained an Outperform rating on AMD stock with a price target of $290, implying an upside of roughly 18% from current levels.
Investors are now keenly awaiting management's commentary during the earnings conference call, set for 5:00 p.m. EST on Tuesday, for further details on CPU demand, inventory trends, and the company's progress in AI-related initiatives.
Market Voices:
"This is a refreshingly grounded take," said Michael Chen, a portfolio manager at Horizon Capital. "The market has been punishing AMD for not being Nvidia, ignoring its execution in the massive and stable server CPU market. Bryson's focus on fundamentals is correct."
"I'm skeptical," countered Lisa Torrence, an independent tech analyst known for her blunt commentary. "Touting China sales as a growth driver in this geopolitical climate is naive at best. And if server CPU demand is so tight, why are there whispers about inventory corrections? This feels like pre-earnings spin to me."
"For retail investors, the key will be guidance," added David Park, a financial advisor. "The stock's move today prices in some good news. The call needs to confirm the margin story and provide clarity on the AI roadmap to sustain this momentum."
Disclosure: The Motley Fool holds positions in and recommends Advanced Micro Devices and Nvidia.