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AMD shares have another 40% upside from here: Baird

on Nov 14, 2022
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  • Baird says AMD stock is a "buy" with upside to $100 a share.
  • Analyst Tristan Gerra cites several catalysts to defend his thesis.
  • AMD shares are currently down nearly 50% versus the start of 2022.

Advanced Micro Devices Inc (NASDAQ: AMD) is in focus on Monday after a Baird analyst cited a string of positive catalysts as he turned bullish on the stock.

AMD shares could climb to $100

Tristan Gerra now recommends buying AMD shares and sees upside in them to $100 – a 40% premium on its previous close.

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His constructive view is primarily predicated on strong demand for “Genoa” – the latest data centre chip that Advanced Micro Devices launched last week.

Genoa’s very significant performance step up should translate into an acceleration in market share gains for AMD in 2023, along with significantly higher pricing and a higher gross margin profile, reinforcing AMD’s EPYC performance leadership.

Versus the start of 2022, the stock is still down nearly 50%.

AMD will continue to expand its market share

It’s an interesting call especially since AMD, earlier this month, disappointed both in terms of quarterly performance and future guidance (source). But Gerra remains convinced that the semiconductor behemoth will continue to steal market share from Intel in “servers”.

Its RDNA 3 GPU, he added, will help expand the footprint against the RTX40 series (Nvidia) as well, thanks to “cost savings” that’re particularly nifty in the face of a consumer slowdown.

The Baird analyst is also bullish on the $49 billion acquisition of Xilinx. Demand for Xilinx products, he forecasts, will remain strong through the first half of 2023.

At 44 times, AMD shares are currently trading at less than half the average of their price-to-earnings multiple for the past five years. That makes Advanced Micro Devices Inc attractive in terms of valuation as well.

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