Morgan Stanley Raises AMD Price Target to $260

Morgan Stanley analyst Joseph Moore raised the price target on AMD (NASDAQ: AMD) to $260 (from $246) while maintaining an Equalweight rating.

“Thoughts on the stock: With an expected good quarter in the rear view mirror, the focus will shift to next week’s analyst day, which will provide clarity on the MI450 opportunity.

There have already been some solid proof points.

The size of the Open AI deal is of course a focus, but the Oracle announcement is probably more tangible, as even with the Open AI deal the cloud service providers will be the ones spending the money.

We expect to get a sense of the value proposition of the MI450 rack scale, with the benefits of the ZT acquisition as an accelerant to development.

We should hear customer testimonials, but as importantly we would like to hear from ecosystem providers, as the company has done in the past. Will there be financial targets?

The company was clear on the call that they will increase their target of a $500 bn SAM by 2028, and we would expect a data center target over that time frame (likely data center, not GPU, which will be hard to separate from CPUs in 2028 anyway due to the CPU/GPU content of the racks.

Our prior PT was based on 30x CY27 MW EPS of $8.20.

Our EPS number comes up to $8.68, and we are maintaining that 30x multiple at the high end of the semis group, but below AI stalwarts NVDA and AVGO on a MW basis.

That represents about 27x non-gaap, which is in-line with current multiples CY27 multiples for NVDA (25x) and AVGO (28x) on current consensus estimates. That brings the target to $260.”

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