A month ago, Lisa Su, the CEO of AMD (NASDAQ: AMD), talked about the company’s AI PC strategy in an interview with CNBC. Su is a firm believer that all PCs in the future will be AI-powered, and now, it looks like AMD is very close to achieving this. AMD stock has been fluctuating dramatically since the beginning of 2024. But the company has a history of innovation, and their next product release could be a turning point.
PCs are Making a Comeback
The PC industry has seen a rollercoaster ride in recent years. Initially, there was a significant surge in demand during the pandemic, but subsequently, the market experienced a correction. While some prominent players in the industry have weathered this storm better than others, PC industry stocks have lagged behind the broader market in the past year.
However, there are signs of a potential rebound, with analysts predicting renewed growth for the PC market in 2024 and 2025. Additionally, the global PC market is expected to reach $315.42 billion by 2029, growing at a CAGR of 9.10% from 2024 to 2029, and one company that could benefit from this is AMD.
The Ryzen Pro 8000 Zen 4 Chips
AMD recently announced its new Ryzen Pro 8000-series processors, extending the Hawk Point 8040-series to commercial laptop and desktop users while simultaneously offering its Ryzen 8000 Phoenix APU models for commercial desktop PCs. The Pro series is based on AMD’s existing consumer-oriented processor models but comes with additional features that tailor them for the commercial market.
The new series is based on the Zen 4 AMD architecture, which the tech giant touts as the template for the world’s most performant x86 processors. In addition, it boasts support for Wi-Fi 7, Bluetooth 5.4, and running local AI applications. Those same AI acceleration features are now headed to commercial users. AMD hasn’t yet attached any retail price to its newly announced Ryzen 8000 Series processors. However, the new CPU models are expected to start appearing in laptops and pre-built PCs in the upcoming months.
Ryzen 9000 Zen 5 Chips Confirmed?
AMD confirmed the new Ryzen 9000 Zen 5 Processors. The company hasn’t released any official statements or held any press conferences. Nevertheless, it has let slip a mention of Ryzen 9000 in the latest chipset driver release. Both Ryzen 8000 and Ryzen 9000 have been flying around the rumor mills over the last few months. However, they are both confirmed now, which could mean that AMD has a bright future ahead with these impressive new products.
Speaking of upcoming AMD releases, we have the company’s next-generation Ryzen CPU architecture, the Zen 5. It is expected to launch in the second half of the year. Considering the launch of Zen 4, which was in September 2022, we should expect to see the Zen 5 processors debuting around the same timeframe. There could be an announcement for them in the summer.
Zen 4 vs. Zen 5
AMD’s latest Zen 4 processors are tearing up the market, but whispers are already swirling about the next generation Zen 5. While specifics are still under wraps, rumors suggest a major jump in performance. In fact, there are leaks that hint at a staggering 40% core-for-core performance improvement, especially for everyday tasks. Zen 4 is unique because it focuses on raw power and clock speeds, but Zen 5 might overtake it thanks to new built-in AI features and new instruction sets, catering more to video editors and machine learning enthusiasts.
History Repeating Itself?
Before the Zen 4 release in 2022, AMD stock was trading at about $95. Shortly after the release, AMD stock went on an astonishing run until it reached a high of $227.30 in March 2024. This is an increase of 139.26%. Since Zen 5 has enhancements to it, you would realize that AMD stock could see a boost after Zen 5 releases.
Based on historical evidence, it becomes apparent that this is a plausible prediction. We witnessed a similar pattern last year during the introduction of Zen 4. Moreover, this year will be different as we have AI integrated into Zen 5 which will meet the market’s strong demand for AI.
AMD Has More Plans for 2024 and Beyond
It was recently reported that AMD is preparing a refresh of its MI300 AI Accelerators, known as the MI350, which is also planned for later this year. Not only that, but the company also confirmed that its Instinct MI300X GPU delivers up to 1.6X the performance of Nvidia’s H100 (NASDAQ: NVDA) in AI inference workloads, and offers similar performance in training work, providing the industry with a sorely needed high-performance alternative to Nvidia’s GPUs. If the MI300X accelerator could manage to achieve such staggering results compared to Nvidia’s H100, then surely the next MI350 will be a game changer as well when it is released.
AMD is not backing up after its release for the MI350 later this year, as they also have plans for 2025. The company confirmed its next-gen MI400 AI accelerator, expected to release in 2025, will feature a more capable architecture that is tuned for the AI-era.
Wall Street Analysts Largely Bullish on AMD Stock
Stephen “Sarge” Guilfoyle, the founder and President of Sarge986 LLC, talked about how AMD stock reaching $162 would be a good buying opportunity about a month ago. Now, AMD stock is trading at $152.24, so the buying opportunity is more obvious than ever, especially with the upcoming releases. Moreover, 29 Wall Street analysts gave the stock a strong “Buy” rating in the last 90 days, while 8 analysts gave it a “Buy” rating. In stark contrast, only 1 analyst gave the stock a “Sell” rating. The average price target these analysts put on AMD stock is $197.25 which is a 29.39% upside from where it’s trading now. Meaning, Wall Street is also extremely bullish on the stock.
On top of that, investment banking firm Evercore recently started covering AMD stock, and it is extremely bullish, setting a $200 price target deriving from a 24x price-to-earnings ratio applied to their projected 2027 EPS of $10. Evercore is bullish thanks to AMD’s acquisition of Xilinx in October 2020, and sees it as a strategic move with significant long-term potential that could yield over $10 billion in revenue synergies. However, these synergies may not materialize until 2025 due to a current cyclical downturn in the FPGA business.
AMD’s History of Comebacks
AMD has carved a path in the chip market with innovation and strategic comebacks throughout the years. Their K6 processors became really big in the late 90s because they offered similar performance to competitors at a lower price, disrupting the market. Meanwhile, the Athlon era solidified AMD’s position as one of the key players in the market.
Now, the company’s roadmap shows steady progress for AMD’s Instinct accelerator lineup over the next few years. The MI350 refresh this year will provide improved AI inference and training performance. Then, the MI400 in 2025 will introduce a new architecture tailored for the evolving AI landscape.
AMD is working to boost its competitiveness and offer alternatives to Nvidia’s dominance in the AI accelerator market. The good news is, AMD said that the AI accelerators market is expected to reach $45 billion, so if the company captures at least a 20% market share, this could unlock around $9 billion in revenue. Therefore, there’s a lot of opportunity for the company’s MI300X series.
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