AMD stock price target raised to $175 from $130 at BofA on AI growth

BofA Securities upgraded AMD's price target to $175 from $130 with a Buy rating, citing stronger-than-expected data center GPU prospects, including robust MI355X pricing and significant future revenue projections. This positive sentiment is reinforced by AMD's approval to resume MI308 chip shipments to China, addressing prior revenue loss concerns. While analyst views are mixed, with HSBC bullish on AI revenue and Goldman Sachs neutral due to Nvidia competition, AMD shares have recently surged over 6% reflecting market optimism regarding its growth drivers.

Analysis

Advanced Micro Devices (AMD) is experiencing a significant positive re-rating from analysts, primarily driven by an improved outlook for its data center GPU business. BofA Securities raised its price target to $175, projecting AMD could add $1 billion to its 2025 data center GPU revenue forecast and $2 billion to the 2026 consensus. This optimism is underpinned by stronger-than-anticipated pricing for its MI355X GPU, at $20,000-$25,000 versus a $17,000 consensus, and expectations of continued server CPU market share gains against Intel. Further bolstering the bull case is the U.S. government's approval for AMD to resume shipments of its MI308 chips to China, mitigating a previously estimated $800 million revenue headwind. While HSBC is also bullish with a $200 price target, citing potential AI revenue of $15.1 billion by fiscal 2026, Goldman Sachs initiated coverage with a more cautious Neutral rating and $140 target, highlighting the formidable challenge of competing with Nvidia. The stock's recent surge of over 6% reflects the market's focus on these growth drivers, though its high valuation, evidenced by a 114x P/E ratio and a beta of 2.05, underscores the significant growth expectations already priced in.

Key Decisions for Investors

• Investors should weigh the bullish analyst sentiment and strong data center GPU forecasts against the significant execution risk and intense competition from Nvidia, as highlighted by the divergent views of BofA/HSBC and Goldman Sachs.
• Given the stock's high P/E ratio of 114x and beta of 2.05, positions in AMD should be managed with an awareness of its high volatility and the elevated growth expectations embedded in its current price.
• Monitor upcoming catalysts for validation of the growth narrative, specifically the fiscal Q2 2025 earnings release on August 5 and the CFO's presentation at the Citi conference on September 3 for updates on guidance and market share.
• The resumption of chip sales to China is a material positive, but investors should remain attentive to any future changes in U.S. export control policies which represent a key geopolitical risk factor for revenue.