Advanced Micro Devices Inc. (NASDAQ:AMD) appears set to give Intel Corp (NASDAQ:INTC) a serious run for its money.

That's according to a fresh update from JPMorgan analyst Harlan Sur who believes AMD can grow data center GPU revenue to more than $5 billion in its current fiscal year.

The company continues "to take share from Intel in server and PC CPUs," the analyst wrote in a Wednesday note.

The company's data center GPU revenue surpassed the $1 billion mark for the quarter, beating JPMorgan's own forecast of $900 million, Sur noted, citing "a faster ramp for its MI300A/X products with HPC and cloud/hyperscale customers."

Sur has a $180 price target for AMD stock by 2025, driven by Q2 earnings optimism. This implies a 30% upside from its current price of $138.44 (as of July 30, 2024).

AMD's Q2 Earnings — Impressive

AMD recently reported its June quarter results, and to say they were impressive would be an understatement. Sur noted a strong 21% quarter-over-quarter increase in data center growth, with both GPUs and server CPUs contributing significantly to the boost.

While the gaming sector was a bit lackluster, as expected, the 9% uptick in PC client shipments more than made up for it. This better-than-anticipated performance underscores AMD's steady advance in a highly competitive market.

AMD's total revenue for the quarter was $5.8 billion, exceeding consensus estimates of $5.7 billion. This remarkable growth is largely attributed to their data center division, which raked in $2.83 billion — a 115% increase year-over-year.

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Outlook Raised On MI300X Optimism For AMD Stock

Sur has adjusted his outlook for AMD's data center GPU revenue, upping the target from $4 billion to an ambitious $4.5 billion+ for 2024.

Sur believes AMD could actually hit $5 billion, thanks to a favorable supply chain and rapid customer adoption of its MI300X GPUs, which are becoming increasingly popular among high-performance computing and cloud customers.

But that's not all. AMD's market share in the server CPU space continues to rise, with the company expected to close this year with a 35-36% share—a substantial leap from last year's 29%.

Sur attributes this to AMD's competitive edge in server technology, as the company continues to gain ground on Intel, particularly in the PC and server CPU segments. The Ryzen mobile and desktop processors have also played a pivotal role in driving client revenue to $1.49 billion, a 49% increase year-over-year.

Sur maintains a Neutral rating on AMD, highlighting a potential upside if the company continues to execute its strategy effectively. With AI becoming the driving force behind tech innovations, AMD is well-positioned to ride the wave and capture significant market share.

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