Advanced Micro Devices (NASDAQ: AMD) has jumped spectacularly. Over the last month, its shares have risen about 55%.
Can it keep climbing? Plenty of Wall Street analysts appear to believe so.
At the heart of the AI boom
Earlier this month, AMD posted its earnings for the second quarter of its 2026 financial year. And they were very strong. For the quarter, revenue hit $10.25bn, up 38% year on year, with Data Centre revenue jumping 57% to $5.8bn. Non-GAAP net income was $2,265m versus $1,566m a year earlier.
In the earnings release, AMD chair and CEO Dr Lisa Su made it clear that the chip company is benefitting from the AI infrastructure buildout.
“We delivered an outstanding first quarter, driven by accelerating demand for AI infrastructure, with Data Centre now the primary driver of our revenue and earnings growth,” she said.
Looking ahead, Su said she expects server growth to “accelerate meaningfully” as the company scales supply to meet demand. She added that customer engagement around its new MI450 Series AI GPUs and its Helios racks is “strengthening”, with leading customer forecasts exceeding the company’s initial expectations.
“We are seeing strong momentum as inferencing and agentic AI drive increasing demand for high-performance CPUs and accelerators.”
AMD chair and CEO Dr Lisa Su
New price targets for AMD
Now, since the results, Wall Street analysts have been scrambling to raise their price targets for AMD and we’ve seen lots of increases. Firms that have targets of $500 or higher include Cantor Fitzgerald, Wells Fargo, Barclays, Baird (its target’s $625!), Evercore ISI, Bernstein SocGen, TD Cowen, and KeyBanc.
That $500 target price is roughly 18% above the current share price. In other words, analysts expect the rally to continue.
Am I buying here?
Now, I’ve been bullish on AMD for a long time. Frustratingly though, I’ve never pulled the trigger and bought it for my portfolio. So will I buy it now in light of the bullish broker sentiment? I don’t think so.
I am keen to get this chip stock into my portfolio at some point because the company really is at the heart of the AI boom with its GPUs and CPUs (demand for CPUs is sky-high right now). But I can’t bring myself to buy after its huge rise this year (it’s up about 100% year to date).
After that kind of pop, the risk/reward set-up isn’t very favourable, in my view. If market conditions change, we could see significant profit taking.
It’s worth noting that the stock doesn’t actually look that expensive if we look at next year’s earnings forecast. With analysts expecting earnings per share of $13 for 2027, the price-to-earnings (P/E) ratio’s only about 33.
Having said that, rival Nvidia trades at around 20 times next year’s earnings forecast. And to my mind, Nvidia’s still very much the superior company here.
So I’m going to keep AMD stock on my watchlist for now. If it pulls back to $300, I’ll be interested in buying it for my portfolio.
Edward Sheldon has positions in Nvidia. The Twelfth Magpie has recommended Advanced Micro Devices and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor and Hidden Winners. Here at The Twelfth Magpie we believe that considering a diverse range of insights makes us better investors.
