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Edward Jones starts AMD at Buy amid growing data center demand, Xilinx opportunity

Published 2024-06-12, 09:04 a/m

Investment firm Edward Jones initiated coverage on Advanced Micro Devices (NASDAQ:AMD) with a Buy rating and added the chipmaker’s shares to its Stock Focus List.

AMD shares rose 1.3% in premarket trading.

The firm’s analysts noted several catalysts driving their move, including the growing demand for data-center infrastructure, which is expected to boost sales of AMD's graphics processing units (GPUs) and central processing units (CPUs).

Moreover, Edward Jones is also bullish on the potential growth from the recent acquisition of Xilinx by AMD, which they believe “adds new products and end-markets to AMD's business.”

“We believe the company remains in the early innings of cross-selling and integrating Xilinx and AMD products,” analysts added.

According to AMD's management, this could represent an opportunity nearing $10 billion.

In addition, analysts pointed out that despite a rebound in the PC markets, there is potential for further growth driven by AI-enabled PCs, which could lead to a longer upgrade cycle. This, in turn, is expected to support higher growth rates for AMD in the PC market segment.

The firm also noted that while AMD's shares are currently trading in line with their historical average, the company is well-positioned to achieve above-average earnings growth.

“We believe our optimism is not fully reflected in the share price,” analysts said.

AMD stock is currently rated Buy by 50 analysts, while 14 and 2 rate it Neutral and Sell, respectively.

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