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AMD (NASDAQ:AMD) shares fell after reporting second-quarter results, with several analysts mixed in their analysis due to concerns over weaker-than-expected guidance.
On the contrary, Morgan Stanley said this is an opportunity for investors to pick up shares in what the firm believes is likely to be a “significant outperformer” compared to the rest of the sector going forward.
Analyst Joseph Moore, who has an overweight rating and $138 price target on AMD (AMD), said he thought the quarterly results should been a “relief” for investors, citing “near universal sentiment” that guidance for servers would be below estimates and that the margin recovery in PCs was unrealistic.
Instead, server guidance was flat year-over-year and up 15% to 20% sequentially, as the company deals with the current cloud weakness.
Moore said there may be concern that the company brought down expectations for its AI chip, the MI300, and a “somewhat conservative” commentary for the data center in 2024, but that may just be more about timing than actual demand.
“We hear very big numbers from the supply chain about next year’s shipments, but have judged that number down substantially given normal new product timing issues,” Moore wrote in an investor note, adding that the company could see as much as $2B or more in MI300 revenue next year.
He added that there is “substantial” demand from customers, but timing is still a key variable, with Nvidia (NVDA) still the dominant player in the inference products space.
“The supply chain is building to the best case, and this is a chip with the longest manufacturing lead times that we have ever seen, at 8 months or so, in a market where customer interest is the highest we have ever seen,” Moore continued.
For the data center, Moore said that everything he’s hearing is positive, including the Genoa ramp (which is delayed) is starting to take hold in the third-quarter, which should drive prices higher throughout next year.
In addition, the competition with Intel (INTC) is not seen as a “major variable,” given that Intel is likely to continue doing well with the enterprise.
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Source: seekingalpha.com
