Wolfe Research Raises AMD Price Target to $450
Wolfe Research analyst Chris Caso raised the price target on AMD (NASDAQ: AMD) to $450.00 (from $340.00) while maintaining a Outperform rating.
“AMD reported 1Q / 2Q revenue / EPS above expectations, driven by continued strength in server CPU / GPU, as well as more resilient Client / Gaming revenue, and an improving outlook in Embedded.
Margins also came in above expectations due to favorable mix shift. The driver of estimates is what was expected – client weakness in 2H, server CPU broadly stronger, and MI-450 kicking in during 4Q.
But the magnitude of server CPU improvement (up 70% y/y in JunQ) was much better than expected, and the client decline doesn’t appear as bad (perhaps due to mix/pricing).
Our CY26 rev increases to $48.7bn as a result – modestly ahead of consensus, and perhaps conservative given the agentic CPU trend.
The story for CY27 hasn’t changed however, and that story is driven by AI accelerators.
On the call, management noted that MI-450 was on track for a DecQ ramp, and that demand was strengthening at their lead customers as compared to their earlier expectation.
Because of the magnitude of accelerator revenue (we assume $15-20bn / GW), even small improvement in demand drives a lot of earnings power.
Our CY27 estimate reflects $80bn rev and $14 EPS, with a combination of stronger server CPU and a bit more accelerator revenue.
Management noted that they have additional GW-level engagements beyond META and AI, and an additional GW of demand would drive on the order of $15-20bn revenue and $3-4 incremental earnings.
We are increasingly of the view that wafer allocation, not demand will act as the constraint. While expectations are now high, the stock is now at 25x our revised CY27 EPS, with a path to upside.
Therefore, despite the stock move, we don’t think we’re at the top.”
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