Since January, shares of Advanced Micro Devices (AMD) have exploded from about $219 to a high of $648.48—a 196% gain in less than a year. Now back to about $585, it’s still a screaming buy thanks to an artificial intelligence boom that shows no clear signs of slowing.
www.barchart.com According to CNBC, Oppenheimer upgraded AMD to “Outperform” from “Perform” and set a $600 price target, citing growing opportunities in its AI business. In fact, analyst Rick Schafer sees a growing opportunity for AMD to become a long-term supplier of the chips powering artificial intelligence. His optimism centers on customers choosing AMD for multiple generations of products, along with the potential for its Helios rack-scale systems to expand. Schafer also pointed to AMD’s yearly rollout of new Instinct AI chips and improvements to its open software platform.
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In addition, AMD could gain even more ground as its partnership with Anthropic gains momentum in the first quarter of 2027, added Oppenheimer, as noted by CNBC. Plus, AMD is getting set to launch its MI500 line of GPUs in the second half of the new year. Even more impressive, AMD just announced that its fifth-generation EPYC processors will power Google Cloud’s TPU 8tx system for AI workloads. In short, there’s substantial opportunity with AMD, especially with the pullback.
Earnings Continue to Impress
Data centers are becoming an even bigger part of AMD’s business. The segment generated $8.5 billion in third-quarter revenue, up 97% from a year earlier. That growth helped AMD beat Wall Street’s expectations. Total revenue rose 45% to $13.38 billion, topping estimates of $13.09 billion. Adjusted earnings also came in ahead of forecasts at $2.09 per share, compared with the $1.95 analysts expected.
In the company’s earnings release, Chair and CEO Dr. Lisa Su credited the sharp increase in data center sales with helping AMD deliver record results and push revenue above the high end of its guidance. Dr. Su added that customers continued to increase demand for AMD’s Instinct and EPYC products. She expects growth to pick up further in the fourth quarter as the company increases production of Helios and Venice.
Looking ahead, she believes AMD’s product lineup, customer relationships, and supply chain partnerships position it to keep growing revenue. For the fourth quarter, AMD expects revenue of about $17 billion, putting its forecast ahead of Wall Street’s $16.2 billion estimate. Profitability guidance was slightly less encouraging: the company anticipates an adjusted gross margin of 55%, compared with analysts’ expectation of 55.3%.
What Do Analysts Say About AMD Stock?
Overall, AMD stock has a consensus “Strong Buy” rating on Wall Street. Of the 47 analysts covering AMD, 38 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and seven have a “Hold” rating. The mean target price of $660.37 implies a potential upside of 13% from current levels. Meanwhile, the high price target of $1,250 implies a potential upside of roughly 114% from its last traded price of $583.49. With AMD, the opportunity comes down to how successfully the company turns demand for its AI chips and data center processors into sustained earnings growth. AMD needs to deliver on its product launches, meet customer demand, and protect profitability as it expands. If it can follow through, the recent weakness could prove to be an opportunity for patient investors.
www.barchart.com On the date of publication, Ian Cooper did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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