William Blair Initiates AMD at Market Perform

William Blair analyst Sebastien Naji initiates coverage on AMD (NASDAQ: AMD) with a Market Perform rating.

“AI Supercycle Drives Significant Earnings Potential. Advanced Micro Devices (AMD) is positioned as a major beneficiary of the AI infrastructure boom.

Compute demand is being accelerated by the deployment of more advanced and powerful models as well as the rise of inference and agentic use-cases.

This is pulling through demand for GPUs, CPUs, and a broad range of other silicon solutions.

Altogether, this should drive a significant step-up in AMD’s revenue opportunity—we estimate sales growing from $52 billion in 2026 to over $104 billion in 2028.

Significant operating leverage should enable non-GAAP EPS to approach $20 in 2028.

GPU Opportunity Still an Uphill Battle.

While AMD’s GPU portfolio has lagged that of its larger rival, Nvidia, the company has done a commendable job of accelerating its product roadmap and differentiating itself across critical vectors (including memory access, price, and use of open standards).

The company is likely to benefit from continued growth in this business, driven by underserved computing demand.

Nonetheless, competition from Nvidia as well as an expanding set of hyperscaler ASIC programs is likely to constrain meaningful share gains for AMD even as it increases its advanced packaging (CoWoS) allocation at TSMC for 2027.

Era of Easy CPU Share Gains Is Ending. AMD has positioned itself as a leader in high-performance CPUs, with its high core counts and chiplet architecture.

Nonetheless, it faces unprecedented competition from the Arm ecosystem, as not only hyperscalers, but also Nvidia, Qualcomm, and Arm itself offer their own CPUs.

Despite the broad support for the x86 architecture serving as a ballast to more significant Arm adoption (roughly 20% of global server share today), AI has become a key accelerant to Arm adoption across new sockets.

In addition, AMD’s long-time rival Intel is starting to show signs of improvement—though we acknowledge it will likely take another two years for the company to compete effectively with AMD (i.e., potentially Intel’s Coral Rapids server CPU in 2028).

Balanced Risk/Reward.

AMD shares trade at a P/E multiple of 33 times on our 2027 estimate, which is a slight premium to the peer group median.

We believe at these levels, valuation properly reflects the balance of strong AI computing demand across its GPU and CPU business, offset by risks including increasing competition, supply tightness, and a potential slowdown in AI spending growth.”

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