Advanced Micro Devices (NASDAQ:AMD) has gone from contender to central force in the AI revolution, thanks to a game-changing pact with OpenAI that’s not only reshaped the competitive landscape but also sent AMD’s stock tearing into uncharted territory.
That represents a big change from just a few months ago, when the company was considered almost a lost cause on the AI chip front. As such, heading into the semi giant’s Q3 earnings on November 4, there’s plenty of bullish sentiment around this name.
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Looking ahead to the print, UBS’s Timothy Arcuri, an analyst who ranks in 4th spot amongst the thousands of Street stock experts, sees “upside bias for FQ3 with results likely skewed toward the $9B high-end of guidance.”
Interestingly, however, the upside won’t be driven by GPUs, but by a robust showing in server and client CPUs, with server strength “potentially fueling” some upside to gross margins.
As for the main metrics, despite seeing the upside potentail, Arcuri’s forecast remains unchanged, calling for revenue of $8.94 billion and adj. EPS of $1.26, above the Street at $8.76 billion and $1.17.
For FQ4, Arcuri thinks AMD could potentially guide as high as $9.5 billion (although his model keeps a more conservative stance). This outlook is supported by “renewed server upgrade activity” and some AI-driven spillover into traditional compute infrastructure, as the industry adopts new strategies to handle increased AI processing in the data center segment. All told, his Q4 forecast remains unchanged, calling for revenue of $9.35 billion and adj. EPS of $1.36, compared to the Street’s estimates of $9.19 billion and $1.32.
Naturally, the main focal point will be on the data center GPU outlook, and here, on the back of expert calls, Arcuri’s view is that following the initial “tool-up” in 2H25, many customers appear to be pausing on the MI355x and waiting for MI455 racks next year. This isn’t a major concern, but Arcuri thinks it is worth noting, especially given the stock’s rally following the OpenAI deal.
Beyond the move toward rack-scale solutions, AMD is making progress on ROCm, though feedback remains a “bit mixed.” Arcuri’s hunch is that many hyperscalers – particularly Microsoft – are “balancing ASIC ramp” with AMD merchant GPU adoption, and recent trends seem to show a preference for ASICs. Some experts noted that ASICs previously used for training are now being considered for inference applications. “We remain mindful that this could all very well change with the OAI deal potentially catalyzing other customers to increase their engagement,” the 5-star analyst said on the matter.
While that reads “somewhat incrementally more positive” for AVGO and MRVL, after generating roughly $6.5 billion in data center GPU revenue this year, Arcuri still believes there is sufficient demand to reach $14 billion in revenue in 2026, and the analyst expects the business will not only double again in 2027 (driven largely by OpenAI), but for AMD to offer a “very bullish multi-year outlook for its data center GPU business.”
Bottom line, Arcuri assigns a Buy rating on AMD shares alongside a $265 price target, although the figure implies shares will stay rangebound for the time being. (To watch Arcuri’s track record, click here)
The Street’s average target is a little lower, and at $249.92 suggests the stock has overshot by 3%. All told, based on 29 Buys vs. 10 Holds, AMD shares claim a Moderate Buy consensus rating. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.