AMD Stock Has More Upside Despite AI Business Decline, Says Wall Street

Advanced Micro Devices (AMD) stock has risen 39% YTD, driven by optimism about its AI graphics processing units and CPU market gains. Despite concerns over trade tensions and competition, most analysts remain bullish and see further upside. AMD reported mixed Q2 results, with a 32% growth in revenue but a decline in AI business revenue YoY. Analysts are optimistic about AMD's AI-powered PC processors, demand for EPYC server chips, and upcoming Instinct MI400 AI chips. TD Cowen and Mizuho analysts have raised their price targets to $195 and $205, respectively, and reiterated Buy ratings.

Advanced Micro Devices (AMD) stock has surged 39% year-to-date (YTD), fueled by optimism surrounding the company's artificial intelligence (AI) graphics processing units (GPUs) and continued growth in the central processing unit (CPU) market. Despite persistent concerns about U.S.-China trade tensions and intense competition, most analysts remain bullish on the stock, expecting further upside [1].

AMD reported mixed results for the second quarter of Fiscal 2025. The company achieved a 32% growth in Q2 revenue and better-than-anticipated guidance for the third-quarter topline. However, Q2 earnings per share (EPS) met expectations, and AI business revenue declined year-over-year due to U.S. export restrictions eliminating MI308 sales to China and the transition to the next-generation offering [1].

Analysts are optimistic about AMD's AI-powered PC processors, demand for EPYC server chips, and upcoming Instinct MI400 AI chips. TD Cowen analyst Joshua Buchalter raised the price target for AMD stock to $195 from $165 and reiterated a Buy rating, highlighting the potential for a solid MI355 ramp in the second half of 2025 and the crucial MI400/Helios launch in 2026 [1]. Similarly, Mizuho analyst Vijay Rakesh raised the price target to $205 from $183 and reiterated a Buy rating, expecting gains from MI308 ramps in China and the MI355 offering [1].

Wall Street has a Moderate Buy consensus rating on AMD stock, with an average price target of $183.97, indicating 10% upside potential from current levels [1].

Beyond AI and CPU markets, AMD is also gaining ground on Intel in the CPU market. Bernstein analysts noted that the PC market was stronger than expected, with shipments up about 7% year-over-year and above pre-COVID levels. AMD gained a substantial ~4 points of desktop unit share at ~30.2% and ~5 points of revenue share, while Intel gained back ~2 points of notebook CPU unit share following several quarters of headwinds [3, 4].

AMD’s average selling prices (ASPs) are rising, underscoring competitiveness. Notebook ASPs rose 8% QoQ, now at a premium to Intel, while desktop ASPs rose ~2% QoQ and sit at a substantial premium to Intel [3, 4]. Additionally, AMD continued to gain traction in servers, with revenue share up ~1.5 points, crossing 40% for the first time [3, 4].

The upcoming accelerator roadmap, particularly the MI4XX ramp, is seen as a longer-term catalyst that could close the raw performance gap and bring rack scale offerings to the portfolio [3, 4].

In conclusion, Advanced Micro Devices stock remains a favorite among analysts, driven by strong performance in AI GPUs and CPUs, as well as continued market share gains. Despite challenges, the company's robust pipeline and competitive positioning suggest further upside potential.

References:
[1] https://www.tipranks.com/news/does-advanced-micro-devices-stock-amd-have-more-upside-heres-what-wall-street-says
[2] https://theoutpost.ai/news-story/minisforum-unveils-ms-s1-max-a-powerful-mini-ai-workstation-with-amd-s-strix-halo-apu-and-usb-4-v2-technology-19450/
[3] https://uk.finance.yahoo.com/news/amd-gaining-more-share-cpu-140806284.html
[4] https://www.investing.com/news/stock-market-news/amd-is-gaining-more-share-in-the-cpu-market-bernstein-says-4200239