Scott Adams of “Dilbert” fame once wrote that when employees are writing up their own goals, they want goals that can be accomplished by a squirrel in a coma or words to that effect. It seems chip stock AMD (NASDAQ:AMD) engaged in similar behavior, as an analyst called out their “sandbagging” projections, sending shares up over 3% in Friday morning’s trading.
To its credit, AMD hiked its revenue projections for artificial intelligence (AI) and looked for $3.5 billion to come from the field. That’s actually a large leap, as originally, AMD only looked for AI to bring in about $2 billion in sales. However, that wasn’t enough for Citi analyst Christopher Danely, who suggested that AMD may have been deliberately underestimating its potential sales in the field. In fact, Danely noted that AMD has several clear paths to victory on that front, starting with Xilinx and ending with the MI300.
Gunning for the Top
There’s nothing to suggest that Danely is right here and that AMD is deliberately undercutting its own forecasts in a bid to get a boost in share price when the next quarter’s reports come out. It’s possible, certainly, but there’s no evidence to suggest either way. However, with some reports suggesting that AMD could be looking to take on Nvidia (NASDAQ:NVDA) itself, that does lend a little more credence to the notion.
Nvidia has long held the top slot in AI chips and development, and if AMD wants a shot at breaking that stranglehold, it will need some hefty budgets for development and marketing. That’s the kind of thing an earnings beat might deliver.
What Is the Price Target for AMD in 2024?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMD stock based on 28 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 104.15% rally in its share price over the past year, the average AMD price target of $191.50 per share implies 8.51% upside potential.
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