Home Ai in Finance AMD Stock Surges Today: What’s Behind the Jump

AMD Stock Surges Today: What’s Behind the Jump

AMD Stock Surges Today: What’s Behind the Jump

Shares of Advanced Micro Devices (NASDAQ: AMD) are rising today, up 7.4% as of 1:45 p.m. ET, according to data from S&P Global Market Intelligence. Meanwhile, Nvidia’s stock was up 2%.

Nvidia may be AMD’s biggest competitor in the artificial intelligence (AI) race, but positive news for the company has a tendency to lift other top AI players. Nvidia’s share price is moving higher today thanks to bullish coverage from an analyst and partnership news, and the gains are having spillover effects for AMD.

Nvidia’s bullish news lifts AMD
No company has a greater impact on AI stocks’ valuations than Nvidia. Nvidia’s graphics processing units (GPUs) have become the foundational hardware powering the artificial intelligence revolution, and favorable developments for the AI leader are often interpreted as a positive sign for other companies with exposure to the tech trend. So even though the company is a more powerful rival in the GPU market, favorable developments for Nvidia often have the effect of sending AMD stock higher.

Citing promising trends in the AI space, Tigress Financial analyst Ivan Feinseth published a bullish note on Nvidia stock yesterday. The analyst reiterated his buy rating and raised his one-year price target from $790 to $985 per share.

On the heels of the price-target hike, Rail Vision announced today that it’s joining Nvidia’s Metropolis platform for machine vision technologies and will be using the GPU leader’s tech to improve the safety and efficiency of rail travel. While a competitor’s wins might not initially seem like a favorable development for AMD, overall adoption of AI technologies points to broad-based opportunities with the tech.

What comes next for AMD?
For the first quarter, the midpoint of AMD’s guidance calls for revenue of roughly $5.4 billion. If the company were to hit that target, it would mean that sales would come in at approximately the same level that it posted in Q1 last year. Meanwhile, AMD is guiding for non-GAAP (adjusted) gross margin of 52%, up from 50% in the prior-year period.

AMD has yet to see a major sales uptick corresponding with the rise of AI. That doesn’t mean that a significant performance boost won’t arrive at some point down the line, but investors should keep in mind that the stock’s 140% gain over the past year has largely been driven by future expectations — and not the kind of explosive sales and earnings growth that have powered Nvidia’s rise.

Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.

They just revealed what they believe are the 10 best stocks for investors to buy right now… and Advanced Micro Devices made the list — but there are 9 other stocks you may be overlooking.

*Stock Advisor returns as of February 26, 2024

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.

Why AMD Stock Is Jumping Today was originally published by The Motley Fool


Please enter your comment!
Please enter your name here