Advanced Micro Devices (AMD 2.37%) has been on an incredible winning streak, and some analysts think that the artificial intelligence (AI) stock is poised to move even higher. On Monday, Barclays analyst Tom O'Malley published a note reiterating an overweight rating on AMD and raising the firm's one-year price target on the stock from $200 per share to $235 per share. Based on the stock's current price of price of roughly $235 per share, that would imply additional upside of about 15%.
O'Malley cited stronger-than-expected micro processing unit (MPU) shipments in December. The analyst expects mid-single-digit growth and continued market share gains for AMD's client MPU segment. On the other hand, he anticipates mid-single-digit declines in the server market even though he expects the company to gain market share.
Can AMD stock keep soaring?
AMD stock is now up roughly 150% over the last year, and much of the excitement has been driven by excitement surrounding the company's opportunities in artificial intelligence. On the other hand, investors should understand that it could take some time for new AI products to begin powering explosive growth.
In the fourth quarter, AMD's revenue rose roughly 6% to reach $6.17 billion. On the other hand, the company's midpoint guidance calls for sales to fall about 12.5% on a sequential quarterly basis in the first quarter. Given that AMD tends to see some cyclicality and typically records stronger revenue in the fourth quarter, that's not shocking. However, sales are still projected to come in roughly flat year over year in this year's first quarter.
For long-term investors, AMD stock looks like a worthwhile buy -- but it's important to understand that its explosive rally has made the chip designer a riskier investment. Some strong, AI-driven growth has already been priced into the stock, and it could see volatile moves in the near term.
