According to PC Gamer, “The AMD Ryzen 7 7800X3D is simply the best gaming CPU around right now. It’s certainly the best gaming chip that AMD has ever made, but it’s also capable of outperforming Intel’s top CPU when it comes to gaming frame rates and is doing so for a lot less cash. It’s also a lot less power-thirsty, too.” Rave reviews such as this would have been considered unthinkable over a decade ago.

After 50 years of playing second best to rival Intel (NASDAQ: INTC), Advanced Micro Devices (NASDAQ: AMD) surpassed it, thanks to CEO Dr. Linda Su, who took the reins in 2014 and AMD was able to unveil the Ryzen in 2017, which became a game changer.

Based on a principle of multiple microscopic CPUs working in tandem, AMD’s Ryzen CPU outperformed Intel’s CPUs in speed and efficiency, and most importantly – cost only half as much. Ryzen and its later updates subsequently added tens of billions to AMD’s revenues, and in 2022, AMD surpassed Intel in market cap, although not in chip market share.

Headwinds and Challenges

Despite AMD’s phenomenal turnaround over the past decade, not everything has been smooth sailing and concern-free.

• Unlike Intel, AMD does not own manufacturing facilities in the US. Dr. Su’s reputation and ties to Taiwan have created a strong relationship with manufacturing facilities owned by Taiwan Semiconductor Manufacturing Co, (NYSE: TSM). While the relationship between AMD and TSMC remains robust, geopolitical tensions between Taiwan and China, whose CCP leadership continues to advocate for “reunification” with Taiwan, even if by military invasion, continues to be a supply chain risk factor. 
• While AMD’s MI300 GPU is a viable competitor to Nvidia’s H100, industry publication Tom’s Hardware estimates that AMD’s new chips sell for just 25% of the price of Nvidia’s  H100, despite their similar performance. This means less room for growth and lower margins. Additionally, Nvidia (NASDAQ: NVDA) isn’t standing still. In Q1, the company announced its new Blackwell platform, designed to train generative AI models at a fraction of the cost of its predecessor. Nvidia’s faster development cycle means that AMD may be stuck playing a game of catchup — putting further pressure on its pricing power, growth, and margins.
• US technology export restrictions require AMD, Nvidia, and other US chip makers to design lower-performance versions of their top products for export to China and the Middle East. Prior iterations from Q1 2024 were rejected by the Commerce Dept. as still being too powerful, and export licenses were withheld. The counterintuitive need to create a better device to market while simultaneously designing lower capabilities is proving to be a more delicate and difficult task than anticipated.

Regardless, investors are much more concerned with future stock performance over the next 1, 5, to 10 years. While most Wall Street analysts will calculate 12-month forward projections, it’s clear that nobody has a consistent crystal ball, and plenty of unforeseen circumstances can render even near-term projections irrelevant. 24/7 Wall Street aims to present some further-looking insights based on AMD’s own numbers, along with business and market development information that may be of help to our readers’ own research.

Key Points In This Article

• The acquisition of ZT Systems, a cloud architecture solution provider, is a key building block of Lisa Su’s AI development strategy objective, which is to provide AI in end-to-end computing.
• AMD’s MI300 GPU and future models will continue to compete with Nvidia for the AI graphics market.
• AMD’s chip architecture for Ryzen and other products will expand for installation applications beyond gaming, such as automobiles, IoT, and others.
• The threat of a PRC military invasion of Taiwan is still a major semiconductor supply chain threat, as AMD, Nvidia, Apple, and other tech companies all rely on Taiwan Semiconductor for its manufacturing needs. 
• If you’re looking for a megatrend with massive potential, make sure to grab a complimentary copy of our “The Next NVIDIA” report. This report breaks down AI stocks with 10x potential and will give you a huge leg up on profiting from this massive sea change.

Advanced Micro Devices News and Updates

11/22/2024

Analysts at Zacks Research have increased their earnings estimates for Advanced Micro Devices from $2.37 to $2.47. Zacks Research also provided estimates for AMD’s earnings in the upcoming quarters and fiscal years. These estimates range from $0.81 per share in Q4 2024 to $4.63 per share in FY 2026.

11/21/2024

Advanced Micro Devices’ shares decreased 1.4% today, trading as low as $134.93.

11/20/2024

Advanced Micro Devices’ stock declined slightly by 1.1% today, trading as low as $137.06.

11/19/2024

Advanced Micro Devices is facing growing inventory challenges and has announced a 4% workforce reduction. Analysts believe that AMD’s current stock price of $139 is overvalued, suggesting a fair value of $87. Today, AMD shares declined by 0.2%, reaching a low of $137.14 during the trading session.

11/18/2024

Advanced Micro Devices’ stock price is on the rise today following the announcement of a partnership with IBM. The two tech giants are teaming up to deploy AMD’s next-generation MI300X accelerators on IBM Cloud.

5-10 Year Review

After stints at IBM and Texas Instruments, Dr. Lisa Su became COO of AMD, assuming the CEO position in 2014. Soon afterwards, she started her overhaul of the company by splitting it into 2 divisions: 

• Computing and Graphics, which includes desktop and notebook processors and chipsets, discrete GPUs, and professional graphics; 
• Enterprise, Embedded, and Semi-Custom, which includes server and embedded processors, dense servers, semi-custom SoC products (including solutions for gaming consoles), engineering services, and royalties.

Dr. Su oversaw the release of the Radeon 300 and Fury series, the last of the Bulldozer derivatives, and then the RX 400 series of GPUs in 2016.

Based on AMD’s Zen architecture, both Epyc for servers and workstations Ryzen for laptops and desktops debuted in 2017. They innovatively took multiple micro CPUs to work as a team for superior computing power and speed. Ryzen, in particular, took the computing world and Intel by surprise, as it catapulted AMD to previously uncharted levels. 

2020 saw AMD announce the acquisition of Xilinx for its field programmable gate arrays (FPGA). AMD would discontinue Xilinx production of its complex programmable logic devices (CPLD) in early 2024. 

Pensando Systems was added to AMD’s portfolio in 2022, with Mipsology to follow in 2023. 

On the AI front, 2023 saw AMD acquire Nod.ai, followed by Silo.AI, Europe’s largest private AI Lab, in 2024.

Fiscal Year (Dec)	Price	Revenues	Net Income
2015	$2.87	$3.991 B	-($660 M)
2016	$11.34	$4.319 B	-($498 M)
2017	$10.28	$5.253 B	-($33 M)
2018	$18.46	$6.475 B	$337 M
2019	$45.86	$6.731 B	$341 M
2020	$91.71	$9.763 B	$2.490 B
2021	$143.90	$16.434 B	$3.162 B
2022	$64.77	$23.601 B	$1.320 B
2023	$147.41	$22.680 B	$864 M
2024 LTM (Jun 2024)	$$162.21	$23.276 B	$$1.354 B

Key Drivers for AMD’s Stock in the Future

• AMD’s MI300 GPU (Graphics Processing Units) and similar products are addressing AI workloads for cloud computing, which is stirring up interest. Microsoft (NASDAQ: MSFT) and Oracle (NASDAQ: ORCL) are already using the MI300. As a result, AMD is now on the radar alongside other AI related stocks.
• The ZT Systems acquisition for $4.9 billion is a key building block of Lisa Su’s AI development strategy. By integrating ZT’s expertise in data center infrastructure, AMD will be able to offer complete AI solutions, encompassing hardware, software, and system-level integration. Therefore, AMD will soon provide a one-stop, comprehensive and integrated offering to clients seeking robust AI solutions.
• Data Center growth (already $2.3 billion sector revenues for AMD in Q1, +80% y-o-y), should continue to expand that area for the near and extended future.
• AMD 3D V-Cache chips will be an integral contributor to AMD-powered data center equipment.

Stock Price Prediction for 2025

The consensus rating from over 40 Wall Street analysts is “buy/outperform” (31 buy, 7 outperform, 10 hold). Their average price target in 12 months is $186.91, which is 34.95% from the price today. 

24/7 Wall Street’s 12-month projection for AMD’s price is $205.20, which would be a 48.16% increase. We believe Dr. Su’s goal of end-to-end AI utility is already underway, with AMD competing with Nvidia in a similar fashion and strategy to how it challenged Intel: with comparable or superior speed and performance for lower prices. 

AMD’s Next 5 Years’ Outlook

The past 10-year median P/E ratio for AMD is 34.27. 24/7 Wall Street is using a more conservative P/E ratio of 30 for the following price predictions. These prices also preclude an invasion of Taiwan from China, which would understandably devastate chip manufacturing worldwide. 

For 2026, we predict a price of $237.12, which would be a 15.56% gain year-over-year. AMD’s acquisition of ZT Systems will be a significant contributor to Dr. Su’s AI development agenda. She anticipates that the AI accelerator and GPU chip market will reach $400 billion by 2027. AMD’s Instinct and Epyc accelerators for machine learning will see a major boost in this surge.

To follow up on the AI agenda, 2027 should benefit from ZT Systems’ software boost capabilities. During 2023-24, AMD  invested more than $1 billion to improve its AI software capabilities and R&D activities.  AMD has already made three small software AI-related acquisitions (Silo AI, Nod.ai, and Mipsology) to bolster its mid- and high-level software abstractions and help customers customize LLMs.  Dr. Su and Nvidia’s Jensen Huang are blood-relative cousins, and their respective competitive drives and tech savvy make the AMD and Nvidia rivalry in AI all the more compelling when the different components are compared head-to-head.  The 24/7 Wall Street price target for 2027 is $294.40. This would be a 24.16% gain year-over-year.

2028 should see AMD get an upswing from its ancillary markets. For example, AMD’s Ryzen is already a big part of the digital cockpits in the automotive market. Its partnerships with Daimler-Benz and Tesla will likely expand to other auto manufacturers as AI becomes more ubiquitous and demand escalates. Our price target is $306, a modest year-over-year gain of 3.94%.

Edge computing would be another ancillary market for AMD that would benefit from AI. 2029 should see a boost in IoT applications using AMD-powered devices and digital architecture.  AMD’s Multi-Chip Modules (MCM) will continue to expand, with its Epyc Milan X, the first MCM GPU, leading the way for a range of other configurations. The resulting bump would be a target price of  $336, a 9.80% gain from the previous year’s price target.

AMD Stock in 2030

At present, no smartphone utilizes any AMD CPUs. Nevertheless, AMD has already announced the availability of Ryzen chips for mobile devices. By 2030, the growth of AI-powered mobile gaming should reach the point where the demand for Ryzen performance in smartphones by game-oriented users should see Ryzen-powered smartphones. This would be a huge boon for AMD, as the smartphone market is a major one that has long eluded it. The 24/7 Wall Street  2030 price target is $396.20.

Year	EPS	P/E multiple	Price
2025	$6.84	30	$205.20
2026	$7.90	30	$237.12
2027	$9.81	30	$294.40
2028	$10.20	30	$306.00
2029	$11.20	30	$336.00
2030	$13.21	30	$396.20

 

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