“Long-Term Potential Still Underappreciated,” Says Top Analyst About AMD Stock

Sentiment shifts fast on Wall Street, something Advanced Micro Devices (NASDAQ:AMD) investors know plenty about. It was only a few months ago that the company was dismissed as a likely AI loser and seen as unable to siphon away market share from Nvidia in the AI chip space. However, that narrative no longer holds.

Big recent deals have boosted the semi giant’s case, and the company seemed to further strengthen investors’ conviction following Tuesday’s Analyst Day.

It was the first event of its kind in three years, with AMD highlighting how surging AI demand has led the company to double its estimated data center TAM. The company also outlined ambitious targets for overall and segment revenue growth, higher market share expectations, and a strong long-term financial outlook featuring notable margin gains and an EPS forecast above $20 – well ahead of previous Street estimates.

The shares surged by 9% in the subsequent session, a move that makes sense to Benchmark’s Cody Acree, an analyst ranked among the top 1% on Wall Street. “We believe the market’s reaction is indicative of the company’s rapidly growing leverage to the aggressively expanding AI Data Center market across both its traditional server CPU portfolio and its increasingly competitive AI GPUs, which is exemplified by a significant number of recent marquee partner announcements who are committing to use AMD GPUs and its planned 2026 rack scale server platform,” the 5-star analyst explained.

Acree thinks AMD’s roadmap is gaining significant momentum, supported by a growing customer base that is “aggressively demanding” larger volumes of high-performance compute resources for both training and “rapidly expanding” inference workloads. These customers are seeking alternatives to Nvidia’s dominant, yet closed and proprietary architecture, particularly as Nvidia struggles to fully meet the market’s surging demand. Evidence of AMD’s strengthened competitive position includes recent deals with OpenAI for 6GW of capacity, Oracle for 50,000 MI450s, Meta who “co-defined” Helios, two new supercomputers for the US Department of Energy, several Sovereign AI projects, and multiple engagements with leading Hyperscalers, many of which are planning major deployments starting in the second half of next year.

Yet, even taking the post-event surge into consideration, Acree doesn’t think the stock fully captures the company’s long-term potential as a credible AI competitor to market leader Nvidia. With its Data Center silicon TAM now projected at $1 trillion by the end of the decade – up from a previous $500 billion estimate – the analyst thinks AMD is in the “very early stages” of reaping the rewards of years of investment and development, alongside the rapid growth of AI inference and training workloads. Acree believes AMD’s current AI position relative to Nvidia closely mirrors its past competition with Intel, where it gradually and methodically eroded Intel’s dominance through years of increasingly competitive designs and a consistently ambitious development roadmap. “While we don’t expect Nvidia to make the same technological competitive mistakes as Intel, we believe the customers of the AI industry are even more eager for a viable supply alternative compared to where the compute industry was just a few years ago,” Acree said on the matter.

Bottom line, Acree maintained a Buy rating on AMD shares, while his $325 price target implies growth of 28.5% in the months ahead. (To watch Acree’s track record, click here)

Looking at the consensus breakdown, based on a mix of 28 Buys vs. 10 Holds, this stock claims a Moderate Buy consensus rating. The forecast calls for 12-month returns of 11%, considering the average target clocks in at $281.27. (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.