Advanced Micro to Buy Back $4B in Stock; Shares Jump 2.4%

Semiconductor company Advanced Micro Devices (AMD) announced a new share repurchase program of up to $4 billion worth of shares. Following the share buyback announcement, AMD shares rose 2.4% on May 19 to close at $76.23.

Advanced Micro intends to fund the buyback through cash generated from operations, the company said.

Under the program, the company will buy back shares in the open market. This repurchase program has no termination date.

Advanced Micro’s CEO Lisa Su said, “Today’s announcement reflects our confidence in AMD’s business and the successful execution of our multi-year growth strategy.”

She further added, “Our strong financial results and growing cash generation enable us to invest in the business and begin returning capital to our shareholders.” (See Advanced Micro stock analysis on TipRanks)

On April 28, Advanced Micro reported better-than-expected Q1 results. Adjusted earnings almost tripled to $0.52 per share on a year-over-year basis and came in well ahead of analysts’ expectations of $0.44 per share. Revenue surged 93% to $3.45 billion and surpassed the consensus estimate of $3.21 billion.

Following the earnings announcement, Northland Securities analyst Gus Richard assigned a Buy rating and a price target of $116 (52.2% upside potential).

Richard commented, “We believe AMD outperformance is drive by superior products built on a superior manufacturing process. We do not expect this advantage to diminish any time soon.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 9 Buys, 6 Holds, and 1 Sell. The average analyst price target of $106.14 implies 39.2% upside potential to current levels. Shares have increased 35.2% over the past one year.

AMD scores a 6 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.

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