Chipmaker Advanced Micro Devices (AMD) is scheduled to announce its third-quarter earnings on November 4. Ahead of the Q3 results, top UBS analyst Timothy Arcuri reiterated a Buy rating on AMD stock with a price target of $265, saying that much like rival Intel (INTC), he also expects AMD to report Q3 revenue toward the high end of its $9 billion guidance range. The analyst expects AMD’s Q3 top line to be driven by strength in both server and client CPU segments.
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AMD stock has rallied 114% (as of Monday’s closing), as investors are optimistic about the company’s ability to capture the demand for artificial intelligence (AI) chips.
Wall Street expects AMD’s Q3 earnings per share (EPS) to grow by 27.2% to $1.17 and revenue to increase by 28.3% to $8.75 billion.
UBS Analyst Is Upbeat About AMD’s Q3 Results
Notably, Arcuri is confident about AMD’s Q3 FY25 revenue, backed by robust server and client CPU businesses, with server strength potentially driving some upside to gross margin. The 5-star analyst expects data center GPU (graphics processing unit) revenue of about $1.7 billion.
For Q4 FY25, Arcuri continues to expect revenue of about $9.3 billion (about $200 million higher than the Street’s expectation). That said, he sees the possibility of AMD guiding as high as $9.5 billion, driven by renewed server upgrade activity and “some spillover from AI into traditional compute infrastructure as the industry embarks on new strategies to prepare for more AI processing in the data processing market.”
Furthermore, Arcuri expects AMD’s client business to be “flat to up,” better than normal seasonal levels. He expects Q4 FY25 data center GPU revenue of about $2.4 billion, which reflects a $700 million increase from Q3 FY25 due to the ramp of MI355x at customers, including Meta Platforms (META) and Oracle’s (ORCL) OCI (Oracle Cloud Infrastructure). Arcuri noted that AMD typically guides Q1 FY26 revenue down slightly due to normal seasonality. He expects this trend to continue this year based on his checks on MI355x, which generally suggest that many customers are waiting for MI455 racks next year. Arcuri also expects management to issue a very bullish multi-year outlook for AMD’s data center GPU business.
Is AMD Stock a Buy or Sell Now?
Currently, Wall Street has a Moderate Buy consensus rating on Advanced Micro Devices stock based on 29 Buys and 10 Holds. The average AMD stock price target of $249.92 indicates a possible downside of 3.8% from current levels.
