Susquehanna Maintains Positive on AMD, $650 Price Target

Susquehanna analyst Christopher Rolland reiterated a Positive rating and $650 price target on AMD (NASDAQ: AMD).

“AMD posted better results and guidance, primarily driven by strength in DC (Server and GPU).

CEO Lisa Su provided initial guidance for 2027 revenue to grow more than >80% YOY, with much of this growth being driven by the DC business.

Accordingly, we are raising our 2027 revenue estimate by >$1B to ~$95.5B. Within DC, MI455x volume shipments began in 3Q with multiple customers bringing initial Helios racks online.

More specifically, AMD highlighted initial deployments at Anthropic, Meta, Microsoft, OpenAI, and Oracle.

As expected, management noted GPU revenue to surpass Server CPU revenue in 4Q as Helios deployments ramp “substantially” (we are modeling GPU revenue of ~$6.8B here).

Looking forward, Helios is expected to continue ramping throughout 2027 as customers have expanded their deployment plans.

As a result, growth in its GPU business is expected to “significantly more than double” in 2027. Accordingly, we estimate revenues here will grow to ~$42B in 2027.

For Server CPU, revenue more than doubled YOY in 3Q, exceeding management’s prior outlook of 80% YOY growth.

Indeed, management was even more constructive on 2027 as revenues are expected to double YOY. Thus, we are raising our Server CPU revenue estimate to $35B in 2027.

While management highlighted additional supply as a driver of the increased outlook, demand continues to exceed available supply. In aggregate, we are raising our DC revenues to ~$77B in 2027.

Moving to Client, results were ~$113M worse than we had expected as revenues declined low-single-digit % QOQ vs. previous guidance of “slight” growth.

Management noted PC sell-through slowed late in 3Q as higher memory and component costs weighed on demand.

Looking forward to 2027, AMD expects to outperform the double-digit decline in PC market units. Gaming results were $95M better than our expectations due to stronger Radeon GPU channel sell-through.

While management did not provide standalone 4Q Gaming guidance, combined Client and Gaming revenue is expected to decline >20% QOQ.

Embedded results were in line as strength here was led by A&D, Auto, Communications, and Industrial. Notably, Embedded revenue growth is expected to accelerate in 2027 (we are modeling +30% YOY).

Beyond the top line, GM results and guidance were roughly as expected, reflecting dilution from the growing contribution of DC GPU revenue business.

All in all, we are encouraged by the accelerating DC momentum and stronger 2027 outlook. We reiterate our Positive rating and $650 PT (~13x 2027E EV/sales).”

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