Proactive Investors - Advanced Micro Devices, Inc. (NASDAQ:AMD) expects to get meaningful revenue from artificial intelligence (AI) starting from the fourth quarter of 2023 as it steps up its game, encouraging analysts at Baird to maintain their ‘Outperform’ rating on the company’s stock, while raising its price target to $170 from $100.
The company introduced Mi300x, a new version of its AI supercomputing hybrid processor designed to support generative AI models, at its recent Data Center and AI Technology event. And it’s expected to be a game changer for AMD.
It is positioned itself for the greater than $150 billion total addressable market it expects for data center AI accelerators by 2027, representing a compound annual growth rate of more than 50% from $30 billion in 2023.
“While its ecosystem is not as mature as Nvidia, AMD is well positioned to be a key beneficiary of AI secular growth trends for the medium term, in our view,” the Baird analysts wrote in a note.
While AMD expects data center revenue to rise by double digits in 4Q 2023, the growth will be even more meaningful in 2024, the analysts said, noting that the company is engaging with multiple hyperscalers for the Mi300 platform, with both Mi300A and Mi300x models expected to begin shipping in the last quarter of 2023.
“Our raised estimates reflect our assumption that AMD gains high single-digit generative AI market share, incremental to our prior estimates,” the analysts said.