On Friday, Melius Research adjusted its outlook on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), significantly raising the shares price target to $265 from the previous $192. The firm reiterated its Buy rating on the stock, signaling confidence in AMD's growth trajectory.
The analyst at Melius Research highlighted AMD's potential in the burgeoning artificial intelligence sector, likening the company's progress to that of Nvidia (NASDAQ:NVDA)'s earlier boom. AMD's development of chips optimized for AI inferencing is seen as a key driver as AI models increasingly move into production phases.
The analyst noted that, despite the aggressive revision of the price target, such a move should not come as a surprise to those who have observed Nvidia's performance in the previous year. AMD's stock pattern is perceived to mirror a "mini-Nvidia," albeit with a time lag, as demonstrated by the exhibits referenced by the analyst.
In the commentary, it was emphasized that AMD's rise is not expected to hinder Nvidia's ongoing momentum. The analyst pointed out that the total addressable market (TAM) for these technologies is expanding, and Nvidia remains a pivotal force within the industry. According to the analyst, Nvidia's comprehensive approach, which encompasses software and a full spectrum of products for both training and inferencing, does not require emulation by AMD.
Furthermore, the analyst suggested that Nvidia's success is beneficial to AMD and other competitors by enlarging the market and enhancing general awareness. Nvidia's achievements are seen as fostering a market environment that is receptive to the emergence of a strong second player in the branded provider space. This context positions AMD as a distant but significant contender in the rapidly evolving AI industry.
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