Advanced Micro Devices (NASDAQ:AMD) heads into its Q4 earnings report today with expectations running high for a beat-and-raise performance.
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That view comes from RBC’s Srini Pajjuri – an analyst ranked among the top 3% on Wall Street – who argues that Intel’s latest results signal “strong server CPU demand and supply constraints, which should be a tailwind to AMD’s revenues and margins.”
In his base case, Pajjuri projects December-quarter revenue of $9.6 billion and adjusted EPS of $1.31, although the analyst makes the case for a ~5% beat.
Looking ahead to 1Q26, Pajjuri expects the guide will come in modestly above the current consensus estimates of $9.4 billion in revenue and adj. EPS of $1.23. Management usually provides qualitative commentary on the following fiscal year during the Q4 earnings call, and the analyst anticipates FY26’s commentary and outlook to be at least consistent with the Street’s call for ~34% revenue growth.
On the AI front, Pajjuri sees Instinct GPU revenue hitting $1.9 billion in the quarter, supported by MI3xx demand from Meta, xAI, and Microsoft. Pajjuri also expects quarter-over-quarter growth to persist through the first half of 2026 and sees additional upside potential from China. Overall, the analyst’s model factors in AI GPU revenue of ~$13 billion in 2026 and about $27 billion in 2027. Management seems to have “solid visibility” into the initial 1 GW rollout with OpenAI (out of a total planned 6 GW), which should kick off in the second half of 2026.
Pajjuri also expects the company to reiterate existing MI450/455 ramp expectations for Oracle and OpenAI, even in the face of recent worries around wafer availability and possible execution challenges at the rack level. However, OpenAI’s heavier spending commitments to Nvidia and Broadcom introduce uncertainty around how it could prioritize GPU and XPU purchases. At the same time, OpenAI and other major AMD customers such as Meta and Microsoft are planning internal ASIC ramps in 2026 and 2027, which could pressure AMD’s share within these accounts.
Meanwhile, server demand remains robust, with AI-driven adoption catalyzing a broader x86 refresh cycle. AMD also continues to hold a meaningful performance advantage, while Intel’s supply limitations should enable additional share gains despite some pressure from ARM-based alternatives. PC demand appears solid in the near term, too, although elevated memory pricing could weigh on total PC unit growth over the course of the year.
So, what should investors ultimately do with the stock ahead of the print? For Pajjuri, the fence is currently the place to be.
“With valuation at 45% premium to NVDA, we see balanced risk/reward,” the 5-star analyst summed up.
As such, the analyst assigns AMD a Sector Perform (i.e., Neutral) rating, backed by a $230 price target. That figure sits 8% below the current share price. (To watch Pajjuri’s track record, click here)
7 other analysts join RBC on the sidelines, yet with an additional 25 Buys, the stock claims a Moderate Buy consensus rating. At $286.66, the average target suggests shares will climb 15% higher over the one-year timeframe. (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.