Morgan Stanley admits it may have underestimated the full artificial intelligence potential of chipmaker Advanced Micro Devices . “We have tried to set conservative forecasts for AMD’s AI, given historic false starts, but higher price points plus supply chain commentary is pointing to an opportunity that is multiples of our initial target,” wrote analyst Joseph Moore in a note to clients. Given this view, Moore lifted the firm’s AI revenue forecast for the company for 2024 to $400 million from $100 million, with a bull case scenario forecasting more than $1 billion in revenue generation. “We would view our $400 mm number as conservative given what we have heard, and we don’t think the $1.2 bn is wildly optimistic, though there are things that have to happen to achieve that,” Moore said Like many stocks adjacently connected to artificial intelligence , shares of the maker of graphics processing units powering many AI models have surged more than 49% this year. Morgan Stanley has an overweight rating on the shares and a $97 price target, implying range-bound action from Wednesday’s close. AMD YTD mountain Shares of Advanced Micro Devices in 2023 Moore called the firm’s initial estimates “likely too low” given the growing demand for GPUs as large language models boom in popularity. Recent conversations with industry contacts lifted his optimism in the company’s abilities. Comments also suggested stronger-than-expected pricing and more share-taking opportunity despite Nvidia ‘s dominance in this market. “We would still expect NVIDIA to be aggressive in defending its turf, but AMD is seeing solid orders from these customers and we are at a stage where these wins are much more tangible than what we saw with prior generations of products,” Moore said. — CNBC’s Michael Bloom contributed reporting.
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