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Analysts continue to point to AMD’s growing position in the AI market. DBS analyst Amanda Tan recently more than doubled her price target on the stock from $260 to $500 while maintaining a Buy rating. Tan believes AMD’s partnership with OpenAI strengthens confidence in its AI roadmap and positions the company to gain share as customers seek alternatives to Nvidia (NVDA). Likewise, TD Cowen analyst Joshua Buchalter reiterated his Buy rating and maintained a $600 price target. Bulls also point to AMD’s rapidly expanding data center business, which generated $5.8 billion in revenue last quarter, up 57% year-over-year.
Still, bears argue that AMD’s rally may have pushed expectations too high. Even after the recent pullback, AMD trades at 101.8x non-GAAP earnings, compared with a sector median of 26.3x, leaving little room for disappointment. Investors are also watching margins closely, as management has acknowledged that some of its newer AI products may carry lower margins than traditional server chips.
Ultimately, investors will be watching to see whether AMD’s AI growth story can grow fast enough to support its premium valuation.
