Wells Fargo raises AMD price target ahead of earnings, sees a nearly 20% gain for the stock

Wells Fargo reiterated an Overweight rating on Advanced Micro Devices (AMD) and significantly raised its price target to $185 from $120, implying an 18.9% upside, citing strong conviction in the company's data center GPU growth trajectory into 2H25, driven by MI355X chip shipments, and robust roadmap execution with its Epyc processors. Analyst Aaron Rakers anticipates AMD will continue gaining server CPU market share, positioning the stock as a buy ahead of its August 5 earnings report. Despite AMD's recent substantial stock outperformance, the broader analyst consensus average target still suggests potential downside, though Wells Fargo's call aligns with a majority of 'buy' ratings.

Analysis

Wells Fargo has reiterated its overweight rating on Advanced Micro Devices (AMD) and significantly increased its price target to $185 from $120, signaling a potential 18.9% upside from the recent closing price. This bullish conviction is primarily based on expected acceleration in data center GPU growth through the second half of 2025, driven by the recent launch and shipment of its MI355X chips. Furthermore, the analysis highlights AMD's strong roadmap execution, anticipating continued server CPU market share gains with the upcoming fifth-generation Epyc 'Turin' processors, alongside sustained demand for its current Zen 4-based products. This optimistic outlook comes after the stock has already appreciated over 76% in the last three months, vastly outperforming the S&P 500. However, a note of caution is warranted, as the consensus analyst price target for AMD stands at approximately $138, which implies more than 11% downside and indicates a significant divergence between Wells Fargo's view and the broader market average ahead of the company's August 5 earnings report.

Key Decisions for Investors

• Investors aligned with the bullish thesis should monitor the August 5th earnings call for management's specific guidance on the MI355X chip ramp and data center growth trajectory, which are the key catalysts supporting the new $185 price target.
• Given the stock's recent 76% surge, investors should weigh the high expectations already priced in against the risk highlighted by the average analyst price target, which suggests potential downside of over 11%.
• Traders and portfolio managers could consider positioning ahead of the earnings report, as a confirmation of server CPU share gains and strong GPU outlook could serve as a significant catalyst, while any weakness could trigger a pullback given the stock's strong run-up.