UBS Lowers AMD Price Target to $700

UBS analyst Timothy Arcuri lowered the price target on AMD (NASDAQ: AMD) to $700 (from $730) while maintaining a Buy rating.

“AMD reported solid numbers and guided about in-line w/ our model – and better than feared post INTC’s guide down – as server CPU upside is more than offsetting client downside.

On top of this, AMD walked up C2027 guidance to a range that is roughly consistent with our model but well north of Street numbers as it is (we think) in a better place supply-wise than INTC, both in terms of wafers and multi-sourced substrate supply.

On top of a superior roadmap, this supply advantage is proving out with this guidance and should not be under-estimated going forward as both client and server are on N2 (as opposed to INTC’s different nodes) and recent substrate investments are finally starting to pay off.

Gross margin commentary for 2027 – while consistent with prior 55-56% messaging – is nonetheless encouraging since commentary suggests ~60% of incremental data center dollars are coming from the lower-margin GPU business.

Net, we walk numbers up once again to ~$19 in C2027E and ~$30 for C2028E – a range that we long suggested was possible.

C2029 is still a long way out, but once the calendar turns to C2027, this should become a bigger part of the debate and even assuming a significant deceleration in growth, we think ~$40 EPS is on the table.

While we are raising numbers, in recognition of multiples having compressed across the semis landscape, we are bringing our PT down from $730 to $700, but we maintain Buy.”

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