Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report drew positive analyst commentary, after the semiconductor sultan announced Monday that Meta Platforms (Facebook) (FB) - Get Meta Platforms Inc. Class A Report will use its Epyc processors.
The stock surged 10% Monday. But on Tuesday it closed at $148.92, down 0.8% amid profit-taking.
Bank of America analyst Vivek Arya raise his price target to $175 from $150 and kept his buy rating.
The Meta deal is “an important development since Meta is the last major hyperscale hold-out to adopt AMD,” he wrote in a commentary.
It’s also important in that “Meta just announced plans to grow capex by more than 65% next year (reaching about 20% of total Super 7 capital expenditures), meaning AMD can now share in this upside with (INTC) - Get Intel Corporation Report and (NVDA) - Get NVIDIA Corporation Report,” Arya said.
“Our $175 price objective is based on 44 times our 2023 estimated non-GAAP earnings per share, which is in the middle of AMD's historical 22 to 64 range and within the compute peer range of 11 to 53.”
Arya noted that at its investor/analyst day Monday, AMD “outlined the next 1.5 years of their server CPU roadmap, including enhanced third-generation server CPU (Milan-X), and a first peak at fourth generation EPYC CPUs (Genoa, Bergamo).”
Jefferies analyst Mark Lipacis has a buy rating and $145 price target for AMD.
“We view FB as a huge, validating win for AMD, foreshadowing accelerating market share gains,” he wrote in a commentary. “FB selecting AMD is significant because FB strives to build environmentally conscious data centers by using direct and evaporative cooling systems.”