Shares of Advanced Micro Devices (NASDAQ: AMD) are rising today, up 7.4% as of 1:45 p.m. ET, according to data from S&P Global Market Intelligence. Meanwhile, Nvidia’s stock was up 2%.
Nvidia may be AMD’s biggest competitor in the artificial intelligence (AI) race, but positive news for the company has a tendency to lift other top AI players. Nvidia’s share price is moving higher today thanks to bullish coverage from an analyst and partnership news, and the gains are having spillover effects for AMD.
Nvidia’s bullish news lifts AMD
No company wields a more significant influence on the valuation of AI stocks than Nvidia. Nvidia’s GPUs have become the cornerstone hardware driving the artificial intelligence revolution, and positive developments for the AI giant are often interpreted as a positive signal for other companies with ties to this technological trend. Despite being a formidable rival in the GPU market, favorable developments for Nvidia frequently result in a surge in AMD stock.
Tigress Financial analyst Ivan Feinseth recently issued a bullish note on Nvidia stock, citing promising trends in the AI sector. Feinseth reiterated his buy rating and lifted his one-year price target from $790 to $985 per share.
In tandem with this price-target increase, Rail Vision announced today its participation in Nvidia’s Metropolis platform for machine vision technologies, leveraging the GPU leader’s technology to enhance the safety and efficiency of rail transportation. While a competitor’s successes may not appear immediately advantageous for AMD, the broader adoption of AI technologies signals widespread opportunities within the sector.
What comes next for AMD?
In the first quarter, AMD’s guidance midpoint anticipates revenue of approximately $5.4 billion, mirroring its performance in the same period last year. Additionally, AMD forecasts a non-GAAP gross margin of 52%, up from 50% in the prior-year period.
Despite the surging interest in AI, AMD has yet to witness a substantial surge in sales directly correlated with this technological trend. However, this doesn’t discount the potential for significant performance improvements in the future. It’s essential for investors to recognize that AMD’s remarkable 140% stock gain over the past year has largely been fueled by future expectations rather than the explosive sales and earnings growth that have propelled Nvidia’s ascent.