Scott Adams of “Dilbert” fame once wrote that when employees create their own goals, they look for goals that can be achieved by a comatose squirrel or words to that effect. Seems like chip stock AMD (NASDAQ:AMD) took similar action, sending the stock up more than 3% in Friday morning trading as analysts cited their “punching bag” forecast.
To its credit, AMD has raised its artificial intelligence (AI) revenue forecast, expecting $3.5 billion from this area. This is actually a huge leap forward, as AMD was initially only looking at AI to bring in around $2 billion in revenue. But Citi analyst Christopher Daenley said that wasn’t enough, and suggested that AMD may be intentionally underestimating its revenue potential in this area. In fact, Danely pointed out that AMD has several clear paths to victory in this space, from Xilinx to his MI300.
Aim for the top
There’s nothing to suggest that Danely is right here and that AMD is intentionally revising its forecasts downward in hopes of boosting its stock price when next quarterly reports are released. That’s certainly possible, but there’s no evidence to suggest it either way. However, some reports suggest that AMD may be looking to take on his Nvidia (NASDAQ:NVDA) in itself lends a little more credence to this concept.
Nvidia has long held the top spot in AI chips and development, and AMD will need big budgets for development and marketing if it wants to break out of that stranglehold. That’s exactly what revenue beats can do.
What is AMD’s price target in 2024?
Turning to Wall Street, analysts have a consensus rating of Strong Buy on AMD stock, based on 28 buys and 6 holds assigned over the past three months, as shown in the chart below. I have. AMD’s average price target of $191.50 per share implies an upside potential of 8.51%, after the stock’s price has increased 104.15% over the past year.
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