AMD(US:AMD) SPDB International·2025-05-19 11:30Investment Rating - The report maintains a "Buy" rating for Advanced Micro Devices (AMD) with a target price of $134.2, indicating a potential upside of 16.7% from the current price of $115.0 [1][4][17]. Core Insights - AMD is positioned as a key beneficiary of the surge in demand for AI large model computing, particularly in the GPU chip segment. Despite facing a negative impact of approximately $1.5 billion on revenue in 2025 due to U.S. export controls, the data center business is expected to achieve strong double-digit growth this year [1][2]. - The MI350 large-scale production is anticipated to drive growth in the data center segment in the second half of the year. AMD is also gaining market share in CPUs for personal computers and servers, which will support growth in both client and data center businesses [1][2]. - The gaming and embedded product segments are expected to maintain growth in the latter half of the year. AMD's forward P/E ratio of 25.4x is significantly lower than last year's peak of 53.4x, making it an attractive investment opportunity [1][2]. Financial Performance and Forecast - AMD's revenue for Q1 2025 was $7.44 billion, a 36% year-over-year increase, with a gross margin of 50.2%. The company expects Q2 revenue to grow by 27% year-over-year, despite a slight decline from Q1 [2][10]. - The financial projections for AMD from 2023 to 2027 indicate a steady increase in revenue, with expected revenues of $31.6 billion in 2025 and $36.5 billion in 2026, reflecting growth rates of 23% and 16% respectively [3][11]. - The net profit is projected to reach $3.13 billion in 2025, with a significant increase in non-GAAP basic earnings per share expected to be $4.0 [3][11]. Valuation - The report employs a DCF valuation method, assuming a growth rate of 12%-20% for AMD from 2030 to 2034, with a perpetual growth rate of 3% and a WACC of 12.0%. The adjusted target price of $134.2 corresponds to a 2025 P/E ratio of 33.2x [2][11].