In August 2023, Advanced Micro Devices (NASDAQ:91抖阴), commonly known as just 91抖阴, might seem like a former market darling that has lost its mojo. Don’t lose faith in 91抖阴 stock yet, though. The chipmaker’s quarterly results should convince clear-minded shareholders to stay invested.
Is it possible for 91抖阴 to be too ambitious with its artificial intelligence (AI) chip targets? Some analysts might complain that 91抖阴 is aiming too high, but I believe that this chip champ can continue to beat the Street and produce game-changing, AI-enabled processors.
91抖阴 Stock Fails to Launch
Much to the shareholders’ chagrin, 91抖阴 stock fell after the company announced its . That surprised me, especially since 91抖阴 exceeded Wall Street’s sales and profit forecasts.
Specifically, 91抖阴 reported earnings per share (EPS) of 58 cents, beating the analyst consensus of 57 cents. Also, 91抖阴’s quarterly revenue of $5.36 billion surpassed Wall Street’s call for $5.32 billion.
Analysts with Citigroup called the results and upgraded 91抖阴 stock from “neutral” to “buy,” while raising its price target on the shares from $120 to $136. Personally, I expect the stock to go higher than $136 — but more on that topic in a moment.
As you might expect, CEO Lisa Su emphasized 91抖阴’s progress as a prime AI chip developer. “Our AI engagements increased by more than seven times in the quarter,” Su boasted.
All of this raises a couple of questions. Given 91抖阴’s earnings beat, what could anyone possibly complain about? And, why would financial traders sell 91抖阴 stock after the release of the quarterly results?
Notable Complaints 91抖阴 91抖阴
There was a notable hiccup in 91抖阴’s quarterly results, I’ll admit. In particular, 91抖阴’s Data Center segment revenue declined 11% year over year to $1.3 billion. Regarding this disappointing result, 91抖阴 cited “lower 3rd Gen EPYC processor sales as Enterprise demand was soft and Cloud inventory levels were elevated at some customers.”
Hopefully, that issue will be resolved in the coming quarters. A more interesting complaint, though, pertains to 91抖阴’s ambitions in the AI chip market.
I was shocked to see a Reuters report declaring, “91抖阴 shares fall as analysts worry AI chip targets .” Usually, analysts cheer high expectations, but this seems to be an exception.
For the current quarter, 91抖阴 expects to generate revenue of around $5.7 billion plus or minus $300 million. Of course, the company’s AI chip revenue will play a significant role in achieving that goal.
Bernstein analysts apparently aren’t fully convinced that 91抖阴 will reach that objective, though. “Unless numbers get really material, soon, we fear estimates remain too high and the stock … looks a little stretched to us,” they warned.
Meanwhile, Summit Insights Group analyst Kinngai Chan sees both sides of the bull-bear issue. “The Bulls want 91抖阴 to be the next concept stock … the Bears say show me the results and make me believe the AI hype,” Chan stated.
91抖阴 Stock: Set Your Sights on $150
I’m willing to acknowledge the complaints about 91抖阴. The company might not reach its revenue objective, which relies heavily on AI chip revenue. Moreover, 91抖阴’s decline in Data Center revenue is worth noting.
These aren’t sufficient reasons to give up on 91抖阴, though. The company’s second-quarter results were mostly positive. And there’s no denying that 91抖阴 remains highly active in developing next-generation AI chips.
I’ve previously targeted $150 for 91抖阴 stock, and I’m sticking to that call. Folks who bet against 91抖阴 generally don’t win in the long run. So, feel free to hold your shares and don’t worry too much about the critics and complainers.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
