AMD initiated with a Buy rating at Loop Capital

Investing.com --Loop Capital initiated coverage of Advanced Micro Devices (NASDAQ:AMD ) with a Buy rating and a price target of $175 in a note Tuesday, citing potential growth in accelerated computing and market share gains in the data center and PC segments. 

The firm believes AMD's stock, which underperformed the SOX index in 2024, is undervalued compared to its peers.

Loop Capital's analysis highlights AMD's position at the "cross-section between the changing system hardware architecture of general-purpose compute and accelerated compute." 

The firm also highlights AMD's strategic position in the shift towards GPUs and specialized compute engines, which are essential for addressing the limitations of Moore's Law.

Loop Capital points out that "a total-systems approach to accelerated computing is required," involving GPUs that deliver superior parallel-compute capabilities compared to traditional CPUs.

One key debate, according to Loop Capital, is whether "AMD's progress in GPU-based data center system architecture" can compensate for the challenges in the maturing general-purpose CPU server market. 

Additionally, the firm questions the extent to which AMD can "exploit Intel (NASDAQ:INTC )'s woes and accelerate market share gains in the PC and CPU-based general server markets."

Investor sentiment for AMD has been low, particularly following weak PC sales at the end of 2024 and reduced expectations for AMD's AI GPU sales, which have dropped from $10 billion to about $8 billion. 

Despite this, Loop Capital sees a promising risk-reward scenario for AMD, emphasizing, "We like the risk-reward for the shares."

Loop Capital projects that AMD could capture "20% of the data center GPU market by 2028," potentially driving $55-$60 billion in revenue by FY28. 

The firm concludes that AMD could achieve $11.00-$11.50 in non-GAAP EPS by 2028, supporting its bullish price target.

 

Source: Investing.com