TLDR
- Advanced Micro Devices stock surged up to 18.8% in premarket sessions after crushing Q1 earnings expectations.
- Seaport Global shifted its rating to buy with a $430 target; shares were at $355.26 prior to the announcement.
- The chipmaker obtained more favorable manufacturing allocation from TSMC than market participants anticipated.
- Baird forecasts the server CPU sector will grow at a 35%+ compound annual rate through the end of the decade, driven by AI workloads.
- The GPU segment continues to be an area of uncertainty, with the MI455 rack-scale product scheduled for second-half release.
Advanced Micro Devices shares are experiencing a dramatic rally following quarterly results that exceeded Wall Street projections on every metric, with premarket trading showing gains as high as 18.8%. Should these increases persist until market close, it would represent the company’s strongest post-earnings performance since early 2019.
Advanced Micro Devices, Inc., AMD
Shares were hovering near $355.26 ahead of the earnings release, reflecting a remarkable 260% climb over the trailing twelve months. Since the report, numerous Wall Street firms have elevated their price projections.
Seaport Global Securities acted swiftly, shifting its stance from neutral to buy while establishing a $430 price objective. Jay Goldberg, the firm’s analyst, suggested that Intel’s recent quarterly performance should have provided a preview. “In hindsight, Intel’s results were a very clear signal that AMD’s business was picking up,” he noted in his research commentary.
The ratings change extended beyond just the top-line figures.
AMD revealed it had successfully negotiated superior manufacturing allocation from Taiwan Semiconductor Manufacturing Company compared to earlier expectations. In an environment where semiconductor demand is intensifying, securing fabrication capacity has become the dividing line between companies positioned to capture growth and those left on the sidelines.
“Our guiding thesis is that companies with access to capacity will outperform as demand ripples across the industry,” Goldberg explained in his report.
Bernstein’s Stacy Rasgon also adopted a more optimistic view following the quarterly disclosure. His financial projections show AMD producing over $14 in adjusted earnings per share by 2027, progressing toward $20 in 2028. These figures stand notably above the FactSet consensus, which currently sits below $12 and $16 for those respective years.
Server CPU Demand Is the Story Right Now
Immediate momentum stems from explosive growth in server CPU sales. Baird elevated its price objective to $625 and anticipates the server CPU market will expand at a compound annual rate exceeding 35% through 2030, propelled by artificial intelligence computing requirements.
Wolfe Research and BofA Securities both established price objectives at $450. RBC Capital adjusted its target upward to $400, pointing to robust server CPU revenue streams and an encouraging forward outlook. Northland positioned its target at $320.
According to InvestingPro data, ten Wall Street analysts revised their earnings projections higher for the coming period.
Goldberg had previously indicated he would wait for AMD’s MI450 GPU scaling before adopting a more constructive stance. However, he conceded that CPU momentum has “pulled up the timeline considerably.”
GPU Business Still a Wait-and-See
Not all analysts have embraced full enthusiasm. Morgan Stanley’s Joseph Moore, maintaining an equal-weight recommendation, observed that AMD’s graphics processing business continues to be “in a holding pattern” while the market awaits the MI455 rack-scale product debut in the latter half of this year.
“What matters is the rack-scale launch in the second half, which we continue to view as a show-me story given inconclusive customer feedback thus far,” Moore stated in his research note.
Jefferies analyst Blayne Curtis, who maintains a buy rating, concurred that “GPU execution in the back half remains the key swing factor.”
Company executives indicated that preliminary feedback on the MI455 provides visibility into a more substantial market opportunity, though they stopped short of providing specific guidance for the second half of the year.
Rasgon’s elevated price targets alongside Moore’s measured approach illustrate a Wall Street community that has largely embraced the CPU narrative, while the GPU segment’s story continues to unfold.
