Keeping My Price Target as AMD Lands ‘AI Godmother’ in Bold $8.2B Move
After AMD’s parabolic rise, Lisa Su is making an aggressive acquisition, while analysts raise the bar for the stock.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
On Monday afternoon, long-time Sarge-folio holding Advanced Micro Devices (AMD) made news. The company announced that it had entered into a definitive agreement to acquire World Labs in an all-stock transaction valued at roughly $8.2 billion. The deal is expected to close by the end of 2026, subject to regulatory approval.
World Labs is an AI model and research lab led by AI pioneer Dr. Fei-Fei Li. Fei-Fei Li, who is sometimes referred to as the godmother of AI, will take on the role of an executive vice president with AMD. This acquisition will bring a world-class team of researchers and modeling experts to AMD, which will be intended to strengthen the company’s ability to design and develop AI hardware, software and broader systems around the evolving needs of the company’s clientele.
AMD CEO Lisa Su commented for the media, “Building the compute platforms for the next generation of AI requires a deep understanding of how models are evolving. Fei-Fei and the World Labs team bring exceptional research leadership and model expertise. Su added that with this acquisition, AMD will be better able to provide for the demands required to “power the next generation of AI and strengthen the open AI ecosystem.”
For some background, Fei-Fei Li served as director of Stanford University’s AI Lab from 2013 into 2018, served on the Board of Directors at Twitter and served as an executive with Alphabet’s (GOOGL) Google Cloud.
In Other News…
Taiwan Semiconductor (TSM), which is another top-five Sarge-folio name, according to the United Daily News (Taiwan-based newspaper) indicated that the firm anticipates increasing its 2nm wafer production by an additional 20% by the end of the year. The company has been producing about 20,000 of these chips per month this year. Despite still being in its earlier stages, TSM’s N2 node already has four times the amount of tape-outs versus what the N3 node was doing at this point. This suggests that demand for the highest-end, smallest chips available continues to ramp higher.
Just who is buying these most-advanced chips? Taiwan Semi’s primary customers for 2nm wafers include Apple (AAPL), Nvidia (NVDA), AMD, and Qualcomm (QCOM). Customers not quite considered to be primary but still in the 2nm mix, include Alphabet, Broadcom (AVGO), Marvell (MRVL), Amazon (AMZN), and OpenAI.
Wall Street’s Response
On Monday afternoon, analyst Joseph Quatrochi of Wells Fargo reiterated his “buy” rating on AMD as well as his $700 price target. Quartrochi is rated at five stars out of five by TipRanks. He has compiled a 77% success rate over the past two years while generating an average return of 42%.
On Tuesday morning, analyst Ruben Roy of Stifel Nicolaus reiterated his “buy” rating on AMD as well as his $635 price target. Roy is rated at five stars out of five by TipRanks. He has compiled a 75% success rate over the past two years while generating an impressive average return of 96.7%. Roy is not “just’ rated at five stars by TipRanks. The service ranks him as number 17 out of the 12,505 (top 0.01%) analysts they track.
The Chart
Readers will see that AMD blasted out of that pennant or triangle pattern in early September. The shares are up 31% month to date and benefited from the mini-golden cross (swing trader’s golden cross) mid-month when the 21-day EMA climbed over the 50-day SMA.
Relative Strength is still quite robust, though the shares have fallen out of a technically overbought state. The daily MACD looks as if it may be starting to relax a bit, though all three components are still set up quite bullishly. It looks like AMD may be starting to consolidate, which would be quite welcome.
Parabolic moves either lead to consolidation or actual selloffs. There is no third alternative. Consolidation is the healthy route.
Price Target: $790 (reiteration, still the Wall Street-high)
Pivot: June High ($585)
Add: Down to 50-day SMA ($509)
Panic: Loss of late July Fib level ($424)
At the time of publication, Guilfoyle was long AMD, TSM, NVDA and AMZN equity.
