Barclays (LON:BARC) analysts assert that AMD (NASDAQ:AMD) stock has "over-corrected" following recent performance dips. Despite broader market fluctuations and investor selectivity towards AI and cyclical names, Barclays sees potential value in AMD’s current stock levels.
AMD's performance gains for the year have reversed as investors shift focus. However, expectations for AMD’s MI300, a pivotal AI product, are pegged at $5 billion for the year, which Barclays believes is achievable.
"If you had told us last December that AMD had $4B+ in the bag, we would have been shocked," the analysts note. Despite some negative indicators from the supply chain, Barclays sees AMD's stock as interesting, even with potential cuts in weaker segments like PC, Xilinx (NASDAQ:XLNX), and Gaming.
According to Barclays, stronger-than-expected PC ODM (original design manufacturer) data for June suggests the possibility of a better-than-seasonal second half of the year.
However, the bank cautions that the "Street is too aggressive," noting that ODMs would need to grow significantly quarter-over-quarter to meet AMD's expectations.
In the server segment, Barclays anticipates modest unit growth in June and higher growth in the latter half of 2024, coupled with slight sequential ASP (average selling price) growth.
Despite some negative supply chain signals, Barclays models MI300 sales of just over $5 billion for the year. Initial expectations were around $8 billion, so the adjustments reflect a tempered yet still optimistic outlook.
Barclays has revised its price target for AMD to $180, aligning with its updated estimates and AI accelerator market analysis. The analysts highlight that MI300 guidance has significantly increased from $2 billion to over $4 billion for 2024, with projections of more than $5 billion in 2024 and $9 billion in 2025.
In summary, Barclays believes AMD stock offers tactical opportunities at current levels and presents potential value moving forward.