AMD shares rose more than 8% on Tuesday, this being their highest closing price since reaching a record in November 2021. The AMD highest stock price was seen on optimism that the company’s AI chips will be in higher demand from companies such as Microsoft, Google and OpenAI. On Tuesday morning, not one, not two, but three analysts raised their price targets on AMD stock, citing decent performance in graphics processing units and a big boost to business as the artificial intelligence (AI) trend enters its “second wave.”
AMD shares update
In the stock market today, AMD stock jumped 8.3% to close at 158.74. Earlier in the session, AMD stock hit a 52-week high of 159.71. The chipmaker recorded its all-time high of 164.46 back in November 2021. Shares of semiconductor company Advanced Micro Devices (AMD 8.31%) were up 8.2% as of 10:45 a.m. Tuesday, and it’s no great secret why.
AMD price target raised
On Tuesday morning, not one, not two, but three analysts raised their price targets on AMD stock, citing decent performance in graphics processing units and a big boost to business as the artificial intelligence (AI) trend enters its “second wave.”
An analyst at Barclays, Tom O’Malley, raised his price target on AMD to $200 from $120, stating that AMD could post $4 billion in AI chip sales this year due to such demand. O’Malley, who has the equivalent of a buy rating on the stock, cited strong demand for the AMD MI300, it’s highest-end machine learning chip for servers.
KeyBanc analysts also increased AMD price target to $195 and Nvidia to $740 on Tuesday, due to strong demand for AI servers.
AMD share closed at $158.74 on Tuesday, roughly 2% below the stock’s all-time high. Nvidia, which has the vast majority of the market for AI chips and was the best-performing stock in the S&P 500 last year, advanced 3% to $563.82.
New server chips for AI
In late 2023, AMD announced new server chips for AI to compete with Nvidia’s H100 and A100 GPUs, which are used by OpenAI to train and serve its models such as the one at the heart of ChatGPT.
AMD and Nvidia are the two major producers of graphics processing units, which were invented for advanced computer games, but are now critical to train and run AI models. As AI applications gained investor attention over the past two years, Nvidia has been the primary beneficiary because the company developed AI software for its chips more than 10 years ago.
“They have built a software layer around their chip that the companies I invest in just can’t get enough of,” Venture capitalist Jim Breyer told CNBC on Tuesday.
Breyer said he is “pounding the table” or betting for both Nvidia and AMD shares.
Analysts see AMD improving its AI software and expect major chip buyers such as cloud providers and tech giants to look hard at using AMD GPUs.
“We are by no means discounting the lead that NVDA has but we think the desire to have a second source will overwhelm difficulties for the software ecosystem,” O’Malley wrote.
Semiconductor market outlook
Outside of AI stocks, the semiconductor market doesn’t look so hot right now, KeyBanc analyst John Vinh said. Outside of AI stocks, the semiconductor market doesn’t look so hot right now, Vinh said. Automotive and industrial chip markets remain weak and are undergoing inventory destocking, he said. Server, PC and smartphone markets are weak or lackluster, he said.