Chipmaker Advanced Micro Devices (AMD) has been gaining attention after reporting record Q2 revenue of around $7.7 billion, a 32% increase from last year. This growth was fueled by strong sales in both its client CPUs and data center processors. The company is also pushing deeper into artificial intelligence, with its new Instinct MI350 series that is designed to compete with rival Nvidia (NVDA). However, despite these positives, AMD still faces some serious challenges.
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For starters, the rising trade tensions between the U.S. and China have led to a costly new agreement in which the company must now pay 15% of its China chip sales revenue to the U.S. government to secure export licenses. This will eat into profit margins and make planning more difficult. At the same time, Nvidia holds a stronger position in AI infrastructure, especially when it comes to large-scale, rack-based systems. Indeed, some analysts are waiting to see if AMD’s next-generation MI400 chips, expected in 2026, can truly match Nvidia’s capabilities before getting more optimistic.
Nevertheless, AMD has other potential catalysts that could push its stock price higher. In fact, its Zen 5 architecture and the complete Ryzen 9000 lineup have strengthened its position in the CPU market, while the new XDNA neural processing unit adds AI acceleration to everyday computing. Separately, in gaming, AMD now holds over 40% of CPU market share among Steam users, thanks to competitive pricing and platform stability. As a result, analysts see this combination of strength in CPUs, GPUs, and AI solutions as a compelling growth story that gives AMD multiple paths to expand in both enterprise and consumer markets.
Is AMD a Buy, Sell, or Hold?
Overall, analysts have a Moderate Buy consensus rating on AMD stock based on 26 Buys, 12 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMD price target of $181.36 per share implies 3.5% upside potential.
