Advanced Micro Devices (AMD) stock has rallied more than 77% year-to-date, driven by the chipmaker’s strong fundamentals and optimism about the demand for its artificial intelligence (AI) graphics processing units. However, shares have pulled back more than 15% over the past month amid concerns about the steep valuations of AI stocks and the news that Meta Platforms (META) is reportedly considering Alphabet-owned Google’s (GOOGL) Tensor Processing Units (TPUs) for its data centers. Despite these concerns, several Wall Street analysts remain bullish on AMD stock and see strong upside potential from current levels.
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Here’s What Analysts Say About AMD’s Growth Potential
Following the news that Meta is in talks to use Google’s TPUs, Bank of America analyst Vivek Arya stated that the news about GOOGL’s TPU intensifies competition, “but in a rising tide, Buy NVDA, AVGO, AMD.” The analyst expressed confidence about the growth prospects of Nvidia (NVDA), Broadcom (AVGO), and AMD. In particular, the 5-star analyst pointed out that trading at a 33x 2026 price-to-earnings multiple, AMD boasts growth catalysts across its CPU, GPU, embedded, and gaming businesses.
Meanwhile, Raymond James analyst Simon Leopold recently resumed coverage of AMD stock with a Buy rating and a price target of $337, noting the company’s dominant position as a supplier of CPUs (central processing units), APUs (accelerated processing units), and GPUs to the consumer and data center markets. While the analyst acknowledged investor concerns and agreed that AMD’s “fundamentals need to catch up,” he is optimistic that they will.
Leopold is encouraged by AMD’s deals with OpenAI (PC:OPAIQ) and Humain. In fact, Leopold believes that the OpenAI deal could boost confidence in AMD GPUs and encourage more AI model builders and hyperscalers to adopt them. He also expects the company to gain further share in the server and PC markets. Importantly, Leopold contends that the AI total addressable market (TAM) is large enough to support multiple chip vendors.
Is AMD Stock a Buy, Sell, or Hold?
AMD recently provided encouraging insights at its Financial Analyst Day event, reassuring investors about its ability to capture massive demand in the AI chip market. CEO Lisa Su expects AMD’s revenue to grow by 35% annually over the next three to five years, driven by “insatiable” demand for AI chips.
Currently, Wall Street has a Moderate Buy consensus rating on Advanced Micro Devices stock based on 28 Buys and 10 Holds. The average AMD stock price target of $284.67 indicates about 33% upside potential from current levels.
