Advanced Micro Devices (AMD) is expected to face some challenges in the coming quarters. However, there is reason to be optimistic about the company's stock, particularly when it comes to their artificial intelligence (AI) chips.

Susquehanna analyst Christopher Rolland believes that despite near-term "headwinds," investors should recognize the long-term opportunities that lie ahead for AMD in the AI chip market.

Wall Street analysts have estimated that AMD will report second-quarter revenue of $5.3 billion with adjusted earnings per share of 57 cents. For the current quarter, estimates predict revenue of $5.8 billion and EPS of 73 cents.

Rolland, recently affirming his Positive rating on AMD stock, did lower his target stock price to $135 from $145. He acknowledges the challenges AMD may face but emphasizes the potential gain in the server market and the exciting prospects for the upcoming MI300 AI chip.

Both AMD and Intel utilize the x86 chip architecture for their processors, which serve as the primary computing powerhouses for PCs and servers.

Rolland pointed out that Intel's outlook for its data center business in the September quarter is subdued due to inventory issues, a slow recovery in China, and weak demand from enterprises. He also anticipates a slowdown in AMD's gaming console segment later this year.

Despite these concerns, Rolland suggests that shareholders should shift their focus towards the promising AI semiconductor market. The launch of AMD's MI300, scheduled for later this year, offers significant potential for AI projects in data centers.

The MI300 is AMD's forthcoming graphics processing unit tailored for AI applications. Its release is highly anticipated within the industry.

In conclusion, while AMD may encounter short-term challenges, its prospects in the AI chip market should not be underestimated. Investors should keep an eye on the exciting developments surrounding the upcoming MI300 AI chip.

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