Investment firm Evercore believes that chipmaker Advanced Micro Devices (AMD) could see upside to its 2025 revenue estimates after the company announced it will resume shipments of its MI308X chips to China. Indeed, the U.S. Commerce Department has confirmed that AMD’s license applications for these chips are now moving forward for review. Once approved, AMD plans to restart shipments and provide more details during its August 5 earnings call, according to Evercore.
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As a result, the firm’s analysts, led by five-star-rated Mark Lipacis, anticipate that this will result in a near-term revenue boost of $700 million and a potential $1.5 billion gain in 2025. This is because AMD had previously estimated that export restrictions would lower second-quarter revenue by about $700 million and reduce 2025 revenue by $1.5 billion. It is worth mentioning that Evercore currently expects AMD’s GPU revenue for 2025 to be around $6 billion, so restoring access to the Chinese market could be a major help.
The analysts also noted that this could improve AMD’s profit margins. In April, AMD projected an $800 million write-down due to unsold inventory and supplier agreements, which pushed Q2 gross margin guidance down to 43% from 54%. While it’s unclear if the full write-down was booked in Q2, Evercore believes that the MI308X has better margins than AMD’s other GPUs. Therefore, if shipments pick up again, it could provide a solid boost to the company’s profitability.
Is AMD a Buy, Sell, or Hold?
Overall, analysts have a Moderate Buy consensus rating on AMD stock based on 25 Buys, 10 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMD price target of $135.97 per share implies 12.6% downside risk.
