Why This Analyst Came Away 'Incrementally More Constructive' From AMD's Analyst Day

Advanced Micro Devices, Inc. (NASDAQ: AMD) held its Analyst Day event on Thursday, when it issued commentary on financials and product pipeline.

The AMD Analyst: KeyBanc Capital Markets analyst John Vinh reiterated an Overweight rating and $150 price target on AMD shares.

The AMD Thesis: Following the event, KeyBanc is incrementally more constructive on AMD's ability to sustain outsized growth of about 20%, analyst Vinh said in a note. The analyst also expects the company to gain market share at the expense of its rival Intel Corporation (NASDAQ: INTC) in data center.

AMD reiterated its 2022 revenue guidance of $26.3 billion, representing 31% pro forma growth and margin guidance of 54%, the analyst noted. Strong data center, embedded and gaming consoles will likely offset weaker PC demand, he added.

The company maintained its long-term revenue growth guidance of 20% but increased its gross and operating margin expectations to 57% and 35%, respectively, from 50% plus and $20%, Vinh said.

The analyst also noted that the company sees increased cost synergies from its Xilinx acquisition.

Related Link: Why This Analyst Recommends AMD And These 3 Chip Stocks As His Favorite Semiconductor Plays

On the product roadmap, Vinh noted AMD confirmed its next-gen server CPU Genoa processor will ramp up in the fourth quarter of 2022. It will boast of a 75% plus performance improvement over Milan, the analyst said. The cloud-optimized Bergamo will ramp in the first half of 2023, he added.

"With increased scale and profitability from the acquisition of XLNX and a continued focus on data center, we expect AMD to sustain outsized growth given secular growth in cloud and share gains," KeyBanc said.

AMD Price Action: AMD shares were down 2.50% to $96.33, Friday morning according to Benzinga Pro data.