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Chip designer Advanced Micro Devices, Inc (AMD) is experiencing a fresh round of enthusiasm from Wall street as several investment banks have increased the company's price target. AMD's share price soared to record highs earlier this week after Meta Platforms announced that its social media platform would begin using the company's server processors. The win marked an important contract for AMD, which has started to strongly focus on the datacenter segment of late and scored impressive gains at a time when its rivals are slowing down.
AMD Receives Impressive $180 Share Price Target From Wells Fargo Due to Strong Datacenter Positioning and Roadmap
The share price upgrades come from Wells Fargo, Susquehanna and Wedbush and all three of them cross $160. AMD's shares opened at $137 on Monday, and following the Facebook, announcement surged by more than 9% to close at $150. During the day, Wells Fargo came out with the first price target increase, in the wake of AMD's Accelerated Data Center Event in which the company's chief executive officer Dr. Lisa Su previewed new processors and launched a brand new datacenter accelerator.
In its analyst note, Wells Fargo outlined that AMD's deal with Facebook and a strong data center lineup will serve the company will. Consequently, the investment firm's analyst Aaron Rakers raised AMD's price target to $180 from $145, the largest of the three price target increases that are the subject of today's discussion.
Wells Fargo's optimism was the only one present on Monday, with Susquehanna and Wedbush jumping into the fray on Tuesday. Both of them released their takes on AMD's latest announcements early in the morning, with Susquehanna setting a $175 price target and basing its decision not only on the Facebook deal but also AMD's Milan-X, Genoa and Bergamo data center products.
Wedbush analyst Matt Bryson took a slightly bigger picture take in his analysis that also saw AMD's price target increase, this time to $165 from $140. According to Bryson, AMD's roadmap is perfectly positioned to let it grow in the future. The only thing needed for the company to do is to capitalize on it and if it does, then it will be able to gain market share to fuel its growth over the next couple of years.
At this front, AMD's datacenter event only served to reinforce Wedbush's belief of a bright future ahead of the company. In its earnings report for the third quarter of this year, AMD reported revenue growth for its six straight quarter, after it managed to pull in $4.3 billion through net sales. This made for 54% annual and 12% quarterly growth and was fuelled by a strong performance by the company's enterprise, embedded and semi custom business segment.
This segment caters to the data center market and it outpaced AMD's traditional bread and butter computing segment in terms of growth. While computing still accounted for the lion's share of the chip designer's revenue pie, enterprise grew by 64% annually in the third quarter and contributed $1.9 billion to revenue.
Following its deal with Facebook, AMD was at the center of an announcement made by International Business Machines Corporation with the latter having chosen the company's third gen EPYC processors for its customer centered products and workloads.
“Our customers have a high demand for computing processing power and the new 3rd Gen AMD EPYC processors provide the high levels of performance and scalability we were looking for,” said Suresh Gopalakrishnan, vice president, IBM Cloud. “Our collaboration with AMD has helped us deliver our highest core counts and bandwidth ever available for IBM Cloud customers, to offer top market performance for today and tomorrow’s demanding workloads.”