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Advanced Micro Devices Forecast: AMD Up Nearly 11% as Semiconductor Companies Soar Thanks to Nvidia

  • AMD shares rose 10.7% boosted by Nvidia earnings.
  • Nvidia raised its first-quarter earnings forecast by $2 billion to $24 billion.
  • The market loves AI stocks, and AMD should benefit.
  • The Nasdaq rose 3% thanks to Nvidia's recovery.

The actions of Advanced Micro Devices (AMD ) rose 10.7% on Thursday after the masterful fourth quarter release of Nvidia (NVDA) on Wednesday. AMD is considered the runner-up to Nvidia's success in becoming the go-to store for artificial intelligence (AI) chips.

AMD shares closed at $181.86, although shares frequently moved above $183 in a bullish session. The S&P 500 and Nasdaq Composite also saw extreme gains on Thursday, gaining 2.2% and 3%, respectively, on the back of Nvidia's rally.

AMD News

Sometimes it's okay for your biggest competitor to win so stridently. Nvidia's beating of Q4 consensus and raising its guidance on Wednesday has sparked a rally among most semiconductor stocks. Super Micro Computer (SMCI) has risen almost 33%, while the main manufacturer of Nvidia, Taiwan Semiconductor (TSM)gained 3% this Thursday.

Nvidia itself gained 16.4% on Thursday after beating the Wall Street consensus on Wednesday by 11% in adjusted earnings and nearly 8% in revenue. What's more, management raised its forecasts for the current first quarter of 2024 from $22 billion in sales to $24 billion in sales. Additionally, gross margins are expected to reach between 76% and 77%.

“We believe that 60% to 70% of companies will ultimately head down the path of AI use cases, as we estimate $1 trillion of incremental spending on AI over the next decade,” wrote Dan Ives, of Wedbush Securities, in his laudatory response.

Cantor Fitzgerald raised his price target on Nvidia from $775 to $900, while Benchmark raised theirs from $625 to $1,000.

A good sign for AMD is that Cantor Fitzgerald noted that demand for Nvidia's new AI products is so strong that there will most likely be shortages. This could help AMD sell more MI300X AI GPUs, which the company is already using in Microsoft's Azure data centers.

AMD Forecast

Thursday's rally has put AMD stock in contention with the all-time high of $184.92 from January 25, just a month ago. Nvidia's success in the AI ​​sector has lifted all AI-related stocks, so AMD could continue to rise on market euphoria.

Support is provided by the 20-day SMA at $173 and the $162.50 level that has acted as support since January 18. This last level helped AMD stay higher on Wednesday of this week.

An important piece of information for bulls is that AMD stock is not yet overbought despite Thursday's rally. The Relative Strength Index (RSI) stands at 62 and gives the stock room to continue rising until investors take profits.

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AMD Daily Chart

Source: Fx Street

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