Advanced Micro Devices Inc. (NASDAQ:AMD) is set to report its third-quarter earnings on November 7, 2023, with analysts anticipating a significant increase in both earnings and revenue. This upcoming report is fueled by a combination of strong seasonal trends, a robust narrative surrounding artificial intelligence (AI), and renewed optimism from Wall Street, positioning AMD for a potentially exceptional November.
Analysts Predict Strong Earnings Performance
According to estimates from Benzinga Pro, AMD is expected to announce earnings of $1.16 per share, with projected revenue reaching $8.74 billion. If achieved, these figures would represent a 26% increase in earnings per share (EPS) from $0.92 a year earlier, alongside a 28% increase in revenue compared to $6.72 billion in the previous year.
Much of this growth can be attributed to AMD’s expanding presence in the AI chip market. The company’s recent advancements in AI accelerators have garnered attention from major enterprise players, enhancing its competitive edge in a rapidly evolving sector.
November: A Historic Month for AMD
AMD has consistently demonstrated strong performance in November, earning the title of the best-performing stock in the S&P 500 during this month. Over the past decade, the stock has averaged a 16.8% return in November, successfully closing higher in eight of the last ten years. The standout performance came in November 2021, when shares surged by 31.7%.
Looking back further, since 1995, AMD has averaged a 12.07% gain in November, with a 67% win rate. Excluding the 4.79% decline observed in 2024, the company has achieved double-digit November gains every year from 2018 to 2023. Notably, significant losses exceeding 5% have occurred only five times in the past thirty years, with the steepest declines recorded during the bear markets of 2000 and 2008.
The impressive November performance is not merely coincidental; it reflects a combination of seasonal investment strategies and the company’s strategic positioning within the tech sector.
AI Growth and Analyst Optimism
Analyst optimism surrounding AMD has been bolstered by the company’s advancements in AI technologies. Bank of America analyst Vivek Arya recently raised AMD’s 12-month price target to $300, up from $250, indicating a potential 13% upside from current levels. Arya cited AMD’s increased visibility regarding the deployment of its MI450 rack, known as “Helios,” following the recent Open Compute Project conference in San Jose.
The Helios racks, which incorporate AMD’s Instinct MI450 GPUs, are scheduled for launch in the second half of 2026 and are already attracting interest from major players like Oracle, which plans to roll out a 50,000-GPU cluster. The open designs of these racks cater to the preferences of cloud giants such as Meta and OpenAI.
Based on conservative projections, Arya anticipates that AMD could capture more than 5% of the AI accelerator market by 2027, an increase from earlier estimates of 3-4%. In scenarios of full OpenAI deployments, EPS could reach between $10-11 by 2027, with the potential to exceed $15 by 2030.
With an estimated $430 billion AI market projected for 2027, the stakes are high for AMD as it positions itself as a key player in this rapidly expanding field.
Looking Ahead
Following Tuesday’s earnings report, attention will shift to AMD’s Analyst Day on November 11, 2023, where the company is expected to provide further insights into its growth strategy, product roadmap, and AI initiatives. Although AMD trails Nvidia Corp. (NASDAQ:NVDA) in AI GPU dominance, it has established itself as a viable alternative for hyperscalers seeking to diversify their supply chains.
Given strong earnings expectations, historical November performance, and increasing involvement in the AI sector, AMD appears well-positioned for substantial growth in the upcoming month, contingent on the results of its earnings report.
