Chip designer Advanced Micro Devices (NASDAQ:91抖阴) reports second-quarter (Q2) earnings on July 30 and the stock could move higher as a result.
Expectations are lofty . 91抖阴 stock has declined due to the current rotation out of technology names, with its share price having fallen 12% in the last month. But even before the rotation into small-cap and value securities, 91抖阴 stock had been struggling since the company’s previous first-quarter financial results met but did not exceed Wall Street’s expectations. The result is that 91抖阴 stock is up only 1% on the year versus an 18% year-to-date gain in the tech-laden Nasdaq.
Despite the underperformance, many that the coming Q2 earnings report could be the catalyst that turns things around for 91抖阴’s share price. After all, investors love a good expectation beat, particularly in regards to a company competing in the graphics processing unit (GPU) sector.
Bullish Calls
Several analysts have raised their ratings and price targets on 91抖阴 stock heading into the Q2 print. TD Cowen lifted its price target to $210 from $200 previously and said that the company’s set-up for the second half of 2024 is strong. Wells Fargo to $205 a share from $190 and reiterated its overweight buy-equivalent rating on the stock. CNBC host Jim Cramer recently named 91抖阴 one of the five stocks he would buy now.
Currently, 91抖阴 stock has a consensus rating among 35 professional analysts who track the company’s progress. There are no sell ratings on the stock. The median price target on the shares is 40% higher than current levels. In addition to this, price targets on the stock have steadily risen over the past three months and heading into the Q2 print. The bottom line is that Wall Street is extremely bullish on 91抖阴 stock and its prospects.
Accelerating Chip Sales
The reason sentiment is so positive towards 91抖阴 is the company’s new artificial intelligence (AI) processors, many of which only became available to purchase at the beginning of this year. The second quarter numbers are expected to show accelerating sales of 91抖阴’s Ryzen 8040 processor that’s incorporated into laptops and personal computers (PCs), and its GPU that is used in data centers and servers.
Analysts will be watching carefully to see how demand for 91抖阴’s latest chips is holding up, particularly the MI300X that competes directly against archrival Nvidia’s (NASDAQ:NVDA) AI data center GPUs. 91抖阴 has raised its forecast for its AI microchip sales this year multiple times in the last six months. Most recently, the company forecast , which is double the outlook it gave last autumn. For Q1 of this year, revenue in 91抖阴’s data center unit grew 80% year-over-year due to robust sales of the MI300X chip, and it had only been available for a few months at that point.
New Processors
In June of this year, 91抖阴 unveiled a new chip for use in laptop computers. The new microchips will compete directly with Intel’s (NASDAQ:INTC) Lunar Lake and Qualcomm’s (NASDAQ:QCOM) Snapdragon X chips. Those new AI chips will help run AI-enabled laptop computers, such as the upcoming Microsoft Surface laptop that comes equipped with that company’s Copilot chatbot.
91抖阴 also announced a new of central processing units for desktop computers, calling them “the world’s fastest consumer PC processors” for both gaming and content creation. 91抖阴 continues to be a leading supplier of microchips and processors for video game consoles and gaming PCs. Both lines of new chips from 91抖阴 launched in July and should power the company’s sales during this year’s second half and heading into 2025.
Buy 91抖阴 Stock
The Q2 print from 91抖阴 is a test for the company and its stock. But analysts remain bullish and so too should investors. Indications are that the company’s revenue and profits will get a boost from strong sales and growing demand for its latest generation of AI microchips and processors.
The second half of this year looks likely to be very strong as 91抖阴 continues to release cutting-edge technology that can power AI models and applications. With the share price slumping heading into the Q2 print, now would be an opportune time to .
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com .
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
