Advanced Micro Devices (AMD) saw significant gains on Thursday, with its share price rising as much as 8.2% during the trading session. As of 1:24 p.m. Eastern Time, the stock was still up 7.3%, eventually closing at a record high of $275.91. The catalyst behind the semiconductor company’s stock movement came from optimistic comments by a Wall Street analyst.
Bernstein analyst Stacy Rasgon maintained an “in-line with the market” (hold) rating on AMD and raised the price target from $235 to $265. Notably, the stock had already surpassed this new target in early trading on Thursday. The analyst believes that under current market conditions, AMD will sell fewer PC chips while shifting toward higher-margin server and data center chips. Additionally, Rasgon cited AMD’s multi-year, multi-generational agreement with Meta Platforms signed earlier this year, which he believes offers potential upside for the company. Under the agreement, Meta will deploy 6 gigawatts of custom versions of AMD’s MI450 artificial intelligence chips as part of its data center construction.
The analyst’s assessment of AMD’s prospects actually lags behind that of his peers. Wall Street is broadly bullish on AMD, with 73% of analysts covering the stock giving it a “buy” or “strong buy” rating. Despite the stock’s continued climb, the average price target of approximately $289 is still about 12% above Wednesday’s closing price. Over the past year, AMD’s stock has accumulated a gain of 189%, and it currently trades at a price-to-earnings ratio of 104 times, with a forward P/E of 41 times.
Forrest Norrod, head of AMD’s data center business, stated that demand over the past six to nine months has been unprecedented, with no signs of slowing or stopping in the short term. Analysts at investment bank KeyBanc pointed out that AMD’s EPYC server CPUs are nearly sold out for the entire year, and lead times for high-end EPYC processors have extended to 8 to 10 weeks. Dylan Patel, chief analyst at renowned semiconductor research firm SemiAnalysis, said in an in-depth interview on April 8 that AI workloads are evolving from simple text generation to complex intelligent agents and reinforcement learning, and that CPUs are facing an extremely severe capacity shortage. A recent report from market research firm TrendForce shows that the current ratio of CPUs to GPUs in AI data centers is approximately 1:4 to 1:8; however, in the era of agentic AI, this ratio is expected to narrow significantly to between 1:1 and 1:2.
