AMD’s [AMD] stock had a blistering 2021. Ripping nearly 57% higher, AMD’s stock benefitted from a string of earning beats and the chip maker stealing even more market share from rival Intel [INTC].
Yet, the first week of trading in 2022 hasn’t been so kind, with AMD’s stock having fallen over 5% so far this year to close Thursday’s session to close at $136.23 - a performance that is indicative of the wider sell off that has greeted tech stocks in the new year.
Considering that AMD’s stock was among Goldman’s 2022 top picks, the recent dip could be a buying opportunity. But what’s going to power AMD’s stock higher in 2022?
AMD stock’s growth drivers
Like the rest of the tech sector, the success of AMD’s stock depends on the strength of the underlying product. And in the first week of January AMD fans were treated to a glut of product updates at industry event CES 2022.
Among news of more kit to enhance PC gaming experiences, AMD hinted that it will drop its next-generation Zen 4 desktop processor in the second half of this year, Other notable announcements were mobile GPUs that will enable lighter gaming laptops, and a new-entry level graphics card that will ship 19 January and Radeon RX 6000S - potentially a big revenue spinner and something to keep an eye on when AMD next updates the market.
In November AMD notched a significant win over rivals by inking a deal to supply Meta Platform with its Epyc chips to power its data centers. Mark Zuckerberg made tech headlines last year by announcing that Facebook would change its name to Meta Platform.
Partly this was a PR move to shift attention away from several negative news stories, but it also signalled a shift in strategy with the company pinning its long-term future on the metaverse concept. Meta said it spent $10bn on the idea last year and expects to increase investment over several years.
Collaborating with one of the most high profile companies in the metaverse space is only likely to benefit AMD. Investors certainly approved with AMD’s stock jumping 10% after the announcement.
In 2022, investors should also keep tabs on whether AMD can further erode market share from Intel. According to its third quarter results, AMD now occupies 24.6% of personal-computer processor sales, up from 22.5% the same time last year. Intel is still dominant with a 75% market share, but If AMD can continue to gain share, then it’s stock could continue to rise.
AMD's share of personal-computer processor sales, up from 22.5% a year ago
Where analysts think AMD’s stock is heading
Goldman Sachs analyst Toshiya Hari picked out AMD’s stock as a top pick for 2022. The analysts said that the stock is increasing market share and that Wall Street underestimates the strength of AMD’s server business. Hari has placed AMD on Goldman’s Conviction List and has a $170 price target on the stock - a decent 25% upside on Thursday’s close.
AMD got some analyst love at the start of last November. Wedbush’s Matt Bryson upped his price target from $140 to $165. Even more optimistic is Susquehanna analyst Christopher Rolland who upped his target from $145 to $175.
Less bullish is Deutsche Bank analyst Ross Seymore who raised his price target from $113 to $120 in December. While Seymore thinks that there’s growth in the chip maker if its supply meets demand, the analyst warned against the possibility of overshipping in 2022.
Among the analysts tracking AMD’s share price on Yahoo Finance, the stock has an average price target of $142.5 - hitting this would see a 4.8% upside on Wednesday’s close. Out of the 31 analysts offering ratings on AMD in January, almost half rate the stock a Hold, while 11 analysts rate it either a Buy or Strong Buy.