Advanced Micro Devices (NASDAQ:AMD) stock sentiment has turned sharply bullish following a prolonged slump through most of 2024 and early 2025. For a time, AMD appeared to be trailing in the AI boom that propelled its rivals to new heights – but that perception is now fading, with shares up nearly 70% over the past three months.
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What’s shifted the narrative is a series of meaningful catalysts that go beyond just top-line growth. Chief among them is AMD’s progress with its MI350 GPUs, which has captured investor attention, while the lifting of China export restrictions has reopened a critical sales channel. Adding to the momentum, CEO Dr. Lisa Su joined President Trump’s Middle East tour in May, sealing a $10 billion joint venture with Saudi Arabia’s HUMAI.
All of this comes against the backdrop of improving market sentiment, which has only added fuel to the rally.
Still, not everyone is racing to cash in. Despite AMD’s recent surge, 5-star investor Kenio Fontes sees further upside – with caveats.
“Despite a higher market cap, AMD’s valuation remains reasonable if growth and margin improvements materialize,” Fontes says.
The investor points to reports that AMD has raised prices for its MI350 GPUs from $15,000 to $25,000, a move that could meaningfully boost margins and signals confidence in competing with Nvidia. Fontes also highlights AMD’s positioning in the inference market, which he sees as crucial as AI adoption shifts from training to real-world applications.
Adding to the bull case, Intel’s recent Q2 earnings hinted at AMD gaining CPU market share. Fontes notes that AMD has consistently made inroads in the server segment, with recent quarters showing a clear trend of Intel ceding ground. The investor views this not only as a likely contributor to AMD’s upcoming Q2 performance but also as structural evidence of AMD’s execution across key verticals.
That said, the investor also acknowledges that the rapid increase in AMD’s share price has removed the ‘margin of safety,’ all the more worrisome as revenue growth starts to cool its jets in the years ahead. However, Fontes emphasizes that AMD is still a name to own – at least for now.
“I still believe that the most appropriate rating for AMD is a buy, but with a more cautious tone and monitoring the results and news,” Fontes concludes.
Wall Street seems to agree, though not without some reservations. AMD holds a Moderate Buy consensus based on 24 Buy, 10 Hold, and 1 Sell ratings. But with the stock now well ahead of the average 12-month target price of $156.47, downside risk has entered the picture. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.