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Valued at a market capitalization of $164 billion, Advanced Micro Devices (AMD) is seen by many as the only genuine competitor to Nvidia (NVDA), the investor darling that has defined the artificial intelligence megatrend.
However, similar to its larger counterpart, AMD’s stock performance has been adversely affected by the imposition of steep tariffs and export restrictions introduced under President Donald Trump’s second term. The restrictions, particularly those targeting advanced semiconductor shipments to China — a vital market for AMD — have significantly weighed on investor sentiment, leading to a 15% decline in the stock’s value year to date. Moreover, the company, in its latest earnings release, revealed that these export restrictions will put a dent of $1.5 billion in lost revenue over the coming months.
Yet, despite the recent headwinds, Rosenblatt Securities analyst Hans Mosesmann remains firmly optimistic about AMD’s prospects, reiterating his “Buy” recommendation along with a Street-high price target of $200. What could be fueling this sustained confidence in the stock? Let's have a closer look.
Strong Q1
In Q1, AMD's revenues soared by 36% from the previous year to $7.4 billion, underpinned by a strong showing in Data Center revenue, which jumped by 57% on a year-over-year basis to $3.7 billion as gross margins improved to 54% from 52% in the year-ago period, reflecting competitive strength.
Earnings went up by 55% in the same period to $0.96 per share, coming in ahead of the consensus estimate of $0.93 per share.
Meanwhile, AMD did not deviate from its path of recording significant cash flow from operations. For the first quarter, the company generated net cash from operating activities of $939 million, a considerable increase from the prior year’s figure of $521 million. Overall, the company closed the quarter with a cash balance of $6 billion, which was much bigger than its short-term debt levels of $947 million.
For Q2, the company is forecasting revenues of $7.4 billion with gross margins of 43%. Although this would denote a yearly rise in revenues of 34.5%, the projected gross margins would be much lower than the prior year’s 52%. However, this should be taken in the context of the $800 million in inventory losses that the company has estimated due to the export controls.
But is the company being strategically savvy to sustain or even grow its place in the semiconductor battle? I believe it is.
Exciting Drivers for AMD
AMD may be a distant No. 2 player in the GPU space, but the gap in market share does not diminish its credentials whatsoever. Plus, the company is making some proactive moves to bolster its position.
Chief among AMD’s upcoming innovations is the MI350, an advanced AI accelerator set to debut in mid-2025. Built on the CDNA 4 architecture, the MI350 marks a generational leap, with AMD projecting up to 35 times the performance of its current MI300X. This boost stems from notable enhancements in memory size, bandwidth, and optimized multi-GPU scalability. Perhaps most critically, the MI350 is designed to fit seamlessly into existing MI300 infrastructure, significantly lowering adoption friction for data center operators. Early access units have already been made available to hyperscale customers, and AMD is reportedly collaborating with Oracle (ORCL) on a substantial MI355X cluster deployment.
At the same time, AMD’s EPYC Turin server processors are gaining widespread traction across cloud and enterprise markets. With an emphasis on power efficiency and scalability, Turin is now featured in over 150 server configurations and over 30 cloud service instances at providers like Amazon Web Services, Google Cloud, and Oracle. Adoption is also spreading in enterprise sectors such as automotive, telecom, and industrial manufacturing. These advances helped propel a 57% year-over-year increase in AMD’s data center revenue during Q1, setting the stage for sustained momentum through the remainder of the fiscal year.
Elsewhere, AMD’s Ryzen AI processors are also experiencing growing commercial uptake. Equipped with embedded NPUs to handle localized AI inference tasks, these chips have seen an 80% rise in design wins year-over-year. Leading PC manufacturers like Lenovo (LNVGY), HP (HPQ), and Asus are already integrating Ryzen AI into their latest systems. Complementing these efforts is AMD’s ROCm ecosystem — the company’s open-source software stack for GPU computing — which now supports more than two million Hugging Face models, including LLaMA 4 and Google’s Gemma 3, reinforcing its relevance in the AI development space.
Contributing to the recent strength in AMD shares is a regulatory shift with the rollback of the AI diffusion rule. With the U.S. government now expected to impose lighter restrictions, AMD gains less-restricted access to key international markets.
Taken together, AMD’s robust technological roadmap and favorable policy shifts are enhancing its growth profile. Analysts are now forecasting forward revenue and earnings growth of 18.11% and 88.55%, respectively — substantially outpacing the sector medians of 6.70% and 10.28%.
Analyst Opinions on AMD Stock
Taking all of this into account, analysts have assigned a rating of “Moderate Buy” for the stock with a mean target price of $131.76. This indicates an upside potential of about 30% from current levels. Out of 42 analysts covering the stock, 29 have a “Strong Buy” rating, one has a “Moderate Buy” rating, and 12 have a “Hold” rating.
