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Momentum surged for Advanced Micro Devices (AMD), a semiconductor leader specializing in high-performance CPUs and GPUs, after it delivered a robust Q1 2025 beat and projected Q2 sales at $7.4 billion, 10% above Bank of America Corporation’s forecast. This outperformance came despite a $700 million headwind from China.
The upside surprise eased fears around artificial intelligence (AI) export curbs and Nvidia’s (NVDA) dominance in GPUs. Bank of America, now bullish, has upgraded AMD to “Buy” from “Neutral”, calling the risk-reward profile “compelling.”
The bank’s optimism hinges on five drivers:
- Over 20% top-line growth estimated for 2025 and 2026.
- Continued CPU market share gains from Intel (INTC).
- Achievable targets for AI GPU sales.
- EBIT margin expansion from 22% in 2025 to 30% by 2027.
- An estimated 2026 price-earnings ratio of 18x.
Along with the upgrade, Bank of America raised its price target on shares from $105 to $120.
About Advanced Micro Devices Stock
Advanced Micro Devices (AMD), valued at $175 billion, has cemented its role at the forefront of high-performance computing, graphics, and visualization technologies.
In the span of just a month, the stock has climbed 20%, and shares have closed up every day since AMD released its latest quarterly results.
This reflects the market’s approval for AMD’s strong revenue and earnings in Q1, along with second-quarter guidance that sailed past estimates.
Advanced Micro Devices Surpasses Q1 Earnings
On May 6, Advanced Micro Devices rolled out its Q1 2025 earnings report, which topped Wall Street estimates. The semiconductor giant posted revenue of $7.4 billion, marking a 35.9% increase year over year. The company’s adjusted EPS of $0.96 surged by 54.8%, leaving analysts’ expectations in the dust.
To provide some perspective, analysts had forecasted revenue of $7.12 billion and EPS of $0.93, but AMD comfortably surpassed these projections.
A major driver behind these results was the performance of AMD's data center division. With revenue skyrocketing by 57% year over year, reaching $3.7 billion, the segment truly delivered.
Client revenue rose 68% to $2.3 billion, although gaming revenue saw a decline of 30%, coming in at $647 million. Despite the setback in gaming, the company’s overall gross margin expanded to 50%, up 300 basis points from the previous year, thanks to the high-performing data center business and a favorable product mix.
Cash generation was another highlight. AMD saw its cash flow from operations surge 80.2%, totaling $939 million, compared to the previous year.
Looking ahead, AMD remains optimistic for Q2, projecting revenue of $7.4 billion at the midpoint, surpassing analysts' expectations of $7.24 billion.
What Do Analysts Expect for Advanced Micro Devices Stock?
Apart from Bank of America, several other prominent firms are equally confident about AMD’s growth. Benchmark analyst Cody Acree has been particularly bullish, praising AMD’s market share gains, which he believes are some of the strongest seen in the computing sector. Acree sees any short-term price dips as an ideal buying opportunity, maintaining a “Buy” rating with a $170 price target.
The stock has secured a solid “Moderate Buy” consensus, reflecting the Street’s confidence. Of the 42 analysts covering the stock, 28 have issued a “Strong Buy,” with just one opting for a “Moderate Buy.” However, 13 analysts remain more cautious, choosing to issue a “Hold.”
The average price target of $128.03 represents potential upside of 14%, while the Street-high target of $200 signals a possible surge of 78% from current levels.
