Advanced Micro Devices (AMD) saw its stock price surge by over 8% to $158.74, marking its highest close since November 2021 and nearing its historical peak by about 2%. Wall Street analysts are optimistic about the potential boost in AMD's AI chip sales driven by demand from tech giants like Microsoft, Google, and OpenAI.
On Tuesday, Barclays analyst Tom O'Malley raised AMD's target stock price from $120 to $200, which is 37% higher than Tuesday's closing price. O'Malley predicts that AMD's AI chip sales could reach $4 billion this year and surpass $7 billion by 2025. He gave AMD a "buy" rating, citing strong demand for its high-end AI chip MI300.
Additionally, on Tuesday, other well-known investment banks on Wall Street, including KeyBanc and Susquehanna Financial, raised their target prices for AMD to $195 and $170, respectively. KeyBanc also increased Nvidia's target price to $740.
At the end of last year, AMD launched its highly anticipated new MI300 series AI chips, claiming superior performance to Nvidia's H100 graphics card and securing orders from Microsoft, Oracle, Meta, and OpenAI.
With optimistic expectations for strong AI chip demand, tech stock analyst Beth Kindig forecasts that next year's shipments of the MI300 chip will reach 300,000 to 400,000 units, while Nvidia's H100 is projected to hit 1.5 to 2 million units.
Venture capitalist Jim Breyer expressed his support for AMD and Nvidia on Tuesday, noting their ability to build a software layer around their chips, a feat that companies he invests in have struggled to achieve. He is actively buying shares of both AMD and Nvidia.
Analysts point out that AMD is improving its artificial intelligence software and anticipate that cloud providers and tech giants will seriously consider adopting AMD's AI chips. "While we in no way underestimate Nvidia's leading position, we believe the software ecosystem needs a second source of supply to overcome the current challenges," wrote O'Malley.
