AMD stock price forecast: could rise by 30% ahead of key news

on Jul 8, 2024
  • AMD share price has crawled back in the past few days.
  • The company will launch its AI chips for laptops this month.
  • Its stock will react to its results, Intel, and Taiwan Semiconductor earnings.

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AMD (NASDAQ: AMD) stock price is having a lackluster performance this year as it continued to underperform the tech sector and Nvidia. It has risen by 16.6% this year while Nvidia has jumped by over 150%, making it the best Magnificent 7 stock. The Nasdaq 100 index has risen by over 21% this year. 

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AMD’s financial performance

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The AMD share price has underperformed the market because of its relatively weaker financial results, which showed that its business is still struggling. 

In its recent financial results, AMD said that its revenue rose by just 2% YoY during the quarter to $5.7 billion. Its net income rose to $123 million while its gross margins rose slightly to 47%.

In contrast, Nvidia had its most spectacular quarter ever as its revenue jumped by more than 200%. Indeed, its quarterly revenues was higher than what the company made in the 2019 financial year. 

Analysts are less optimistic about AMD as they expect its quarterly revenue will come in at $5.27 billion, a drop by 1.27% from the same quarter in 2023. For the year, analysts expect that its revenue will rise by 4.1% to $23.6 billion. 

Therefore, based on this lackluster performance, there have been questions about whether AMD is severely overvalued. Besides, at a market cap of over $277 billion, the company is trading at a forward (26) price-to-sales ratio of 52, which is highly expensive. 

AMD’s silver lining

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Despite the company’s challenges, there is a silver lining that could push its performance higher than where it is today. First, analysts expect that PC sales will bounce back this year. In a recent note, IDC noted that PC market returned to growth in the fourth quarter as companies shipped over 59.8 million computers. 

The company expects that PC sales will continue growing this year and move to pre-pandemic levels. Some of the top companies in the industry are the likes of Lenovo, HP, and Dell. 

AMD could benefit from this trend because of its upcoming chip launches. It is expected to launch the AI 300 Series on July 17th. This will be an important chip focused on laptops that will help AI creators handle substantial AI workloads.

AMD will also launch the Ryzen 9000 Series processors for desktops that will start to ship in August. These chips could help the company could continue doing well in the coming months.

The other silver lining is that the company could take a market share in the data center market since it launched its AI chip recently. A recent report found that the company has a market share of 4% in the GPU market while Nvidia has 94%.

My expectation is that the company will continue gaining market share as companies look for cheaper and quality GPUs. As we have seen in the electric vehicle market, even the best companies – in this case Tesla – face competition issues.  

In the case of the GPU market, there are signs that demand is currently outstripping supply, meaning that AMD will likely be the biggest beneficiary. These tailwinds could push the AMD stock price higher from the current level.

AMD stock price forecast

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amd stock

AMD chart by TradingView

The daily chart shows that the AMD share price bottomed at $141.40 in May and has now rebounded to $174.32. It has moved above the 38.2% Fibonacci Retracement point.

The stock has remained between the lower and first support of the Andrew’s pitchfork tool. It has also jumped above the 50-day and 25-day Exponential Moving Averages (EMA) while the MACD indicator has moved above the neutral point.

Therefore, the AMD stock price will have a bullish breakout as buyers target the key resistance point at $226, its highest point this year. This price is about 31% above the current level. The next catalyst to watch will be its earnings scheduled on July 30th. It will also react to Intel’s results on July 25th and Taiwan Semiconductor’s on July 18th.

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