AMD Stock Soars on AI Chip Demand Surge

Oppenheimer has upgraded Advanced Micro Devices (AMD) from "Perform" to "Outperform," establishing a new stock price target of $600. This upgrade, effective November 9, stems from robust data center performance and increasing demand for AMD's artificial intelligence (AI) chips, highlighted during the latest earnings call.

The firm's bullish stance is further reinforced by discussions with AMD's CFO and VP of Investor Relations, who emphasized server CPUs and initial shipments of MI455 and Helios as crucial factors for the data center segment's growth. Oppenheimer projects data center revenue to double and continue accelerating through 2027.

Looking ahead, Oppenheimer forecasts AMD's data center revenue to increase by 135% next year, eventually constituting approximately 85% of total sales by 2027. This projection is underpinned by a commitment to an annual product release schedule, including MI500 in 2027 and MI600 in 2028, ensuring competitiveness in the AI accelerator market.

Significant demand from major clients like OpenAI and Meta is expected to bolster data center growth through the first quarter of next year. Further support is anticipated from cloud service providers' substantial capital expenditures, projected to reach approximately $1.3 trillion in 2027. Oppenheimer notes favorable pricing trends and the demand for compute-heavy agentic AI as tailwinds for AMD's GPU and CPU sales.

Following AMD's third-quarter results, other Wall Street firms have also expressed optimism. DA Davidson raised its price target to $600 with a "Buy" rating, while StoneX reiterated "Buy" with a $685 target. TD Cowen maintained its "Buy" rating and $675 target, and Baird reiterated its "Outperform" rating with a $1,250 price target, underscoring market confidence in AMD's business strategy.