AMD Shares Now Top Piper Pick Because of AI Server Chips
Advanced Micro Devices shares are trading higher Thursday, at least in part thanks to a bullish note about the chip maker’s AI server business from Piper Sandler analyst Harsh Kumar.
Kumar, who maintains an Overweight rating and $175 target price on the stock, designated AMD as his top large-cap semiconductor pick heading into the second half of the year.
In a research note, Kumar noted that he traveled with AMD management in Europe last week, and came away “extremely impressed” with the company’s strategy and its competitive positioning in the market for GPUs used for artificial intelligence applications, where it is one of the few companies challenging
head on.
Kumar also sees tailwinds ahead for both AMD’s PC and conventional server segments.
But AI is at the heart of the AMD story right now. Kumar reports that AMD has more than 100 customers for its AI processors, with most of them expected to ramp up adoption in the 2024 second half. He says that the company’s flagship MI300 chip is “performing very well,” with sales expected to top $4 billion this year.
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But as AMD recently disclosed, it has a flurry of follow-on chips coming, including the MI325 (expected later this year), the MI350 (coming next year) and the MI400 (slated for 2026). Kumar contends MI350 will be competitive with Nvidia’s Blackwell chip line, while the MI400 takes on Nvidia’s recently announced next generation chip, dubbed Rubin.
The analyst points out that AMD’s customers for its AI chips include Microsoft, Meta and Oracle.
One other factor that could be contributing to the strength in AMD shares is a Wall Street Journal article asserting that some Samsung AI PCs based on
Qualcomm
’s
Snapdragon chips are having trouble running some applications. That news is pressuring shares of both Qualcomm and
(which provides the designs on which Qualcomm’s chips are based.) Investors have been upbeat about the prospects for Qualcomm to take some market share in PC processors from AMD and Intel.
In Thursday trading, Advanced Micro shares are 4.5% higher at $161.59, while Arm is off 9% at $158.36 and Qualcomm is 5.7% lower at $214.18. Shares of AMD rival
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are fractionally lower.
Write to Eric J. Savitz at eric.savitz@barrons.com
