One Wall Street analyst sees 25% upside in Advanced Micro Devices stock

The growing popularity of Artificial Intelligence (AI) has been a boon to many companies in the semiconductor space.Advanced Micro Devicesfirms( Advanced Micro Devices (NASDAQ resonance code: AMD)is one of the beneficiaries of this trend. Driven by these secular tailwinds, the company's processors are in strong demand.

As far as possible in the past year, AMD has achieved an amazing 78% increase, but a Wall Street analysts believe that AMD has a longer way to go.

Profit from the artificial intelligence boom

Evercore ISI analyst Mark Lipacis has an Outperform (Buy) rating on AMD stock and a $200 price target. With a potential upside of 25% from Monday's closing price, the analyst sees AMD as a beneficiary of the "creative shift in the era of computing曏 processing" as the company's share of the CPU market for data centers continues to grow.

The analyst went on to say that with the recent release of the Mi300 series of AI gas pedals, platforms, and data center acceleration units (APUs), AMD has become a leader in the AI market.INVISTAAdaptive alternatives to AI-centric graphics processing units (GPUs).

This analyst may have hit the nail on the head. The rapid shift in demand for generative AI has resulted in a shortage of the High-Box processors needed to run AI, and AMD is well-positioned to capitalize on this scarcity. In addition, althoughIntelAMD has long been one of the leaders in the data center CPU market, but it has been expanding its share at the expense of its long-time competitors. To add insult to injury, AMD's share of the desktop CPU market grew for the first time in more than two years.

Clearly, the results of AMD's actions are just beginning to show up in its financial results, with Q4 revenue up 10% year-over-year, but if the company can capitalize on the surge in demand for AI-centric processors, the future looks bright.

The stock isn't cheap - it's eight times forward sales - but if AMD continues to expand its market share, it could end up being a bargain.

Should you invest $1,000 in Advanced Micro Devices now?

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Danny Vena has a position in Nvidia. the Motley Fool has recommended Advanced Micro Devices and Nvidia. the Motley Fool recommends Intel, and suggests holding the following options: long Intel Jan 2025 $45 calls and short Intel May 2024 $47 calls. the Motley Fool has a disclosure policy. The Motley Fool has a disclosure policy.

Advanced Micro Devices Stock Has 25% Upside, Says One Wall Street Analyst was originally published by The Motley Fool.