Cantor Fitzgerald Reiterates Overweight on AMD, $350 Price Target

Cantor Fitzgerald analyst C.J.

Muse reiterated an Overweight rating and $350 price target on AMD (NASDAQ: AMD).

“The company outlined a new 3-5 year target financial model (CY28-CY30), with metrics including a revenue CAGR of >35%, GM of 55-58%, >35% OM, 13-15% Tax rate, a ~25% FCF Margin, and EPS of >$20.

Applying metrics from the updated target model including a 56.5% GM and 35.5% OM, we see CY29 (mid-point) revenue/EPS of $132B/$22+ (implied EPS for CY30 is $33+).

Overall, the bullish target model, including the strong >37% revenue CAGR is not a major surprise (though reassuring) while GMs of 55-58% are definitely better than feared given the question on how rack-scale solutions would affect margins.

On GM, the company discussed various puts and takes, including scale and volume, optimization (yield and test time improvement and design for cost/quality), and mix (product and customer).

Capital allocation remains centered around investing in the business and M&A (where AMD highlighted that it has invested >$100B in the last 5 years, including $60B in acquisitions, >$40B in organic investments, and $1B in smaller investments in companies), as well as repurchases (where it has $9.4B remaining on its authorization) as well as maintaining a strong balance sheet and investment grade credit rating.”

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