Advanced Micro Devices (AMD) extended its winning streak to four days on Friday on expectations of massive growth in the AI chip market.
AMD’s stock advanced 7.11% to $174.23 per share on January 19 for an impressive 18.88% weekly gain. It also lifted 0.68% after-hours to $175.41, with analysts predicting a 1.16% jump to $177.44 apiece in the coming trading session.
The multinational semiconductor company has grown 26.58% since the first market session of 2024. Analysts credit the resurgence to AMD chief executive officer (CEO) Lisa Su’s focus on the research and development (R&D) of high-performance and energy-efficient processors.
Su’s strategy positioned the US chipmaker as the top competitor of Nvidia in generative artificial intelligence (GenAI) and high-performance computing (HPC) solutions. As a result, AMD’s share in the server processor market has expanded from 10.00% in 2020 to 25.00% in mid-2023.
The company, however, is expected to suffer declines in its gaming and embedded systems segments. Still, projected double-digit growth in its data center and client personal computer (PC) divisions is seen as sufficient to cover the losses.
AMD is in a significant position to leverage the growth in AI infrastructure mainly due to the success of its MI300 products. Over the past three years, the firm has reported a 52.30% sales growth rate and a 176.40% earnings per share (EPS) growth rate.
AI Chip Market Growth Boosts AMD Price Target
Three days after Barclays revised its 2024 year-end price target for AMD to $200.00 per share, analysts upgraded it once more to $205.00.
The Santa Clara-headquartered semiconductor company is projected to be one of the top beneficiaries of the AI boom in 2024.
Industry watchers expect the AI chip market to grow 25.23% to $67.00 billion this year from $53.50 billion the year earlier. In line with that, US social media giant Meta Platforms (META) has revealed plans to ramp up its graphics processing unit (GPU) procurement to billions of dollars in 2024.
In December 2023, Meta joined OpenAI and Microsoft in purchasing the AMD Instinct MI300X AI chip for their GenAI projects. Economists have deemed AI a top priority for businesses expanding their global presence.
