Advanced Micro Devices, Inc. stock forecast: 100 USD could mark the end of the price correction

In Q4 2024, Advanced Micro Devices, Inc. (NASDAQ: AMD) reported a record-high revenue of 7.70 billion USD. However, net income declined by 28% due to rising costs and weak gaming and embedded solutions sales. Despite overall business growth, investors were disappointed by the subdued forecast for the AI processor segment, where AMD lags behind NVIDIA, and the anticipated decline in data centre sales. As a result, the company’s shares fell, with the market interpreting the report as evidence of intensifying competition and a possible slowdown in key growth areas.

This article discusses AMD, its revenue breakdown, and its product offerings in the AI market. It provides a fundamental analysis of AMD and a technical analysis of Advanced Micro Devices stock, forming the basis for the AMD stock forecast.

About Advanced Micro Devices, Inc.

Advanced Micro Devices, Inc. (AMD) is a US-based company founded in 1969 by Jerry Sanders and a group of fellow engineers. It designs and manufactures semiconductor devices, including processors, graphics chips, and server solutions. The company went public with an IPO on the NYSE in 1972 under the ticker AMD.

AMD is present in the rapidly expanding AI market with the following products:

• Graphics Processing Units (GPUs) for data centres: AMD produces Radeon Instinct microprocessors and has recently introduced new models in the MI series designed for high-performance computing and AI workloads. For example, the MI300 is a high-powered processor optimised for deep data analysis and large AI models
• Radeon Open Compute (ROCm) software: AMD has developed an open-source software platform, ROCm, providing tools for AI development and high-performance computing on the company’s GPUs
• Field-Programmable Gate Arrays (FPGAs): following the acquisition of Xilinx, AMD expanded into FPGAs, which are widely used for AI applications, including signal processing and adaptive computing
• Central Processing Units (CPUs): AMD also optimises its EPYC series processors to support AI computing in server solutions
• Products for end devices: in addition to server solutions, AMD develops specialised GPUs and FPGAs for AI-powered end devices, such as autonomous vehicles, smart cameras, and medical equipment

Advanced Micro Devices, Inc.’s main revenue streams

AMD’s revenue is generated from four key segments:

1. Data Center: includes EPYC server processors, AMD Instinct graphics accelerators for AI and scientific computing, and Xilinx FPGA solutions for specialised workloads in data centres.
2. Client segment: includes Ryzen and Athlon processors for desktop PCs and laptops, delivering high performance for general users and enthusiasts, and integrated graphics solutions for hybrid devices.
3. Gaming segment: includes Radeon GPUs for gaming PCs, integrated solutions for gaming laptops, and custom processors for gaming consoles such as PlayStation and Xbox.
4. Embedded segment: covers high-performance processors and graphics solutions for embedded systems in automotive electronics, industrial automation, medical devices, and telecommunications.

Advantages of Advanced Micro Devices, Inc. in the semiconductor market

AMD has several strengths that enable it to compete effectively with key industry players such as Intel Corp. (NASDAQ: INTC) and NVIDIA Corp. (NASDAQ: NVDA). The company’s main advantages are outlined below:

• Processor architecture: AMD introduced the Zen architecture, which significantly enhanced performance and energy efficiency. The Ryzen (consumer) and EPYC (server) series have gained popularity thanks to their excellent performance-to-price ratio. In recent years, AMD has surpassed Intel in terms of core and thread counts in processors
• Multi-core and multi-threaded solutions: AMD typically offers more cores and threads at the same price point, making its processors attractive to users requiring multitasking and high-performance computing (for example, for graphics, video editing, data streaming, etc.)
• Innovations in graphics technology: although AMD lags behind NVIDIA in some high-performance GPU functionalities, it maintains a strong position due to processors with high data processing throughput, offering a competitive price-to-performance advantage. With the RDNA and RDNA 2 series, AMD has significantly improved the energy efficiency and performance of its graphics cards
• EPYC server solutions: AMD’s EPYC line delivers an impressive performance-to-price ratio in the server segment, gaining traction among large corporations and data centres. These processors support more core counts per socket, reducing scaling costs for server infrastructure
• CPU and GPU integration: AMD manufactures both processors and graphics chips, allowing it to develop integrated solutions for laptops and gaming consoles. For example, AMD supplies processors for PlayStation and Xbox consoles, which ensures a stable revenue stream and reinforces its market presence
• Competitive pricing: AMD frequently offers lower-priced alternatives to Intel and NVIDIA, making its products attractive to a broader customer base, from enthusiasts to corporate clients
• Rapid adoption of new technological processes: AMD collaborates with TSMC to swiftly implement advanced process nodes (such as 7 and 5 nm), enhancing energy efficiency and performance across its processors and graphics chips

Advanced Micro Devices, Inc.’s Q3 2024 report

On 29 October, AMD released its Q3 2024 earnings report, confirming continued revenue and net income growth. Below are the report’s key figures:

• Revenue: 6.82 billion USD (+18%)
• Net income: 0.77 billion USD (+158%)
• Earnings per share: 0.47 USD (+161%)
• Operating profit: 0.72 billion USD (+223%)

Revenue by segment:

• Data Center: 3.55 billion USD (+122%)
• Client segment: 1.88 billion USD (+29%)
• Gaming segment: 462 million USD (-69%)
• Embedded segment: 927 million USD (-25%)

AMD benefitted substantially from AI advancements, reflected in its Data Center segment, where revenue surged by 122%, contributing 52% of total revenue. The Gaming segment suffered the steepest decline (-69%), making it its weakest performer.

For Q4 2024, AMD projected revenue in the range of 7.20-7.80 billion USD, with an average estimate of 7.50 billion. This implied a 22% year-on-year increase and a 10% rise compared to Q3 2024. However, the forecast fell slightly short of analysts’ expectations, sparking investor concerns, particularly amid intensifying AI market competition and a broader slowdown in segment growth.

Advanced Micro Devices, Inc. Q4 2024 report

On 4 February, AMD released its Q4 2024 earnings report, showing a 37% decline in net income. The report highlights are outlined below:

• Revenue: 7.65 billion USD (+24%)
• Net income: 0.48 billion USD (-37%)
• Earnings per share: 0.29 USD (+29%)
• Operating profit: 0.87 billion USD (+155%)

Revenue by segment:

• Data Center: 3.86 billion USD (+69%)
• Client segment: 2.31 billion USD (+58%)
• Gaming segment: 563 million USD (-59%)
• Embedded segment: 923 million USD (-13%)

2024 financial performance:

• Revenue: 25.78 billion USD (+14%)
• Net income: 1.64 billion USD (+92%)
• Earnings per share: 1.00 USD (+88%)
• Operating profit: 1.90 billion USD (+375%)

In Q4 2024, AMD CEO Lisa Su highlighted the company’s strong performance, reporting a record annual revenue of 25.80 billion USD, up 14% from the previous year. This growth was mainly driven by a 94% surge in its Data Center revenue and a 52% increase in the Client segment. Su also emphasised that AMD prioritises total revenue rather than the number of processors shipped, particularly amid concerns about potential CPU oversupply in the PC market.

The company attributes the decline in Q4 net income to a 17% rise in operating costs, primarily due to higher research and development investments, especially in AI. Additionally, despite strong Data Center growth, AI GPU sales fell short of expectations, further impacting profitability.

For Q1 2025, AMD expects revenue of 7.10 billion USD, slightly exceeding analysts’ projections. However, Su cautioned about a potential AMD Data Center sales slowdown, citing heightened competition, particularly from NVIDIA (NASDAQ: NVDA) in the AI processor market.

AMD management remains optimistic about 2025. Su projects strong double-digit growth in both revenue and EPS for the year. She also stressed the long-term potential of AMD’s Data Center AI business, which generated over 5.00 billion USD in 2024 and is expected to eventually drive annual segment revenue into the tens of billions of dollars.

AMD management’s sentiment was cautiously optimistic, focusing on leveraging the company’s strengths in AI and computing to drive future growth while staying agile in response to market shifts in weaker segments.

Experts’ forecasts for Advanced Micro Devices, Inc.’s stock

• Barchart: 27 of 41 analysts rated the stock as a Strong Buy, one as a Moderate Buy, and 13 as Hold, with a price target high of 225 USD
• MarketBeat: 21 of 32 specialists assigned a Buy rating to the shares, 10 recommended Hold, and one advised Sell, with a price target range of 110- 250 USD
• TipRanks: 25 out of 37 analysts recommended the stock as a Buy, 11 as a Hold, and one as a Sell, with a price target range of 110-225 USD
• Stock Analysis: 11 of 29 experts rated the stock as a Strong Buy, 10 as Buy, seven as Hold, and one as Sell, with a price target range of 110-250 USD

Technical analysis and 2025 forecast for Advanced Micro Devices, Inc. stock

On the monthly timeframe, Advanced Micro Devices stock is trading within an ascending channel and is currently undergoing a corrective phase, declining towards the trendline. Based on AMD’s stock performance, the potential price movements for 2025 are as follows.

The primary forecast for Advanced Micro Devices stock suggests a decline towards the 100 USD support level. A test of this level may coincide with a test of the trendline. A rebound from this support level would indicate the end of the correction and a resumption of growth in the stock price, with the first upside target at the 143 USD resistance level. A breakout above this would trigger further price growth towards the channel’s upper line, near 220 USD. This scenario is supported by the cautious 2025 forecast from the company’s management, which could lead to the stock price continuing its decline over the coming month. However, if the situation improves, investor interest in AMD stock could rise, increasing the share price.

The alternative forecast for Advanced Micro Devices stock predicts a breakout below the 100 USD support level, followed by a decline to 80 USD.

Risks of investing in Advanced Micro Devices, Inc. stock

When investing in AMD shares, it is essential to consider the following risks:

• Intense competition: AMD faces tough competition from Intel Corp. (NASDAQ: INTC) and NVIDIA, which may lower prices or accelerate the introduction of new technologies, potentially impacting AMD’s market share negatively
• Reliance on TSMC: AMD relies on TSMC to manufacture its chips. Any supply disruptions or delays in the introduction of new technology processes at TSMC (NYSE: TSM) could affect AMD’s market position
• Demand fluctuations: the PC and server market is cyclical and depends on macroeconomic conditions. A decrease in demand for devices may reduce AMD’s revenue
• Development of proprietary AI chips by consumers: large tech companies like Amazon, Google, and Microsoft are investing in the development of their semiconductors for data centres and specialised tasks. This reduces their reliance on external suppliers, including AMD. If these corporations continue to increase spending on developing their own chips, it could limit AMD’s overall market, reduce its share in the data centre segment, and slow its revenue growth over the long term
• Integration of acquisitions: following the acquisitions of Xilinx and Pensando, AMD must integrate these assets into its structure effectively. Failures in this process could lead to increased costs and reduced profitability

Summary

AMD is a highly innovative company that successfully competes with Intel (NASDAQ: INTC) in the processor segment and is striving to establish a foothold in the AI hardware market, where NVIDIA holds a dominant position. The company has proven its ability to adapt to industry changes, reflected in its expansion in the Data Center and Client processor segments. However, despite record revenue, AMD faces serious challenges related to exports and competition.

While the company actively operates internationally, the export of its cutting-edge chips is restricted by US sanctions, particularly concerning the supply of high-performance AI processors to China. Although AMD attempts to bypass these limitations by offering alternative versions of its chips, export restrictions could negatively affect its growth in this key region.

AMD still faces several significant challenges ahead. The company lags behind NVIDIA in the AI processor segment, with its MI300 series and the upcoming MI350 lineup yet to prove their competitiveness. Additionally, the PC and gaming market is experiencing a slowdown, which could lead to excess inventory and a decline in profits.

AMD has strong long-term growth potential, but its success will depend on its ability to compete in the AI sector, effectively navigate geopolitical challenges, and drive innovation. If the company overcomes these obstacles, it will continue to expand its market share and strengthen its position against Intel and NVIDIA.