Evercore ISI maintains AMD stock Outperform rating, $126 target

On Wednesday, Evercore ISI upheld its positive stance on AMD (NASDAQ:AMD) shares, maintaining an Outperform rating and a $126.00 price target. The firm’s assessment follows AMD’s revenue and earnings per share (EPS) performance, which surpassed revenue expectations but had a mixed result with EPS. According to InvestingPro data, AMD currently trades at a P/E ratio of 98.38, reflecting high growth expectations. The company maintains strong financial health with a current ratio of 2.62, indicating solid liquidity management.

The analysts at Evercore ISI expressed confidence in AMD, particularly in the wake of the company’s financial results, which showed a revenue beat and a mixed EPS outcome. They highlighted AMD’s projection that its Data Center GPU business, known as Instinct, is anticipated to expand by over 60% quarter over quarter, reaching $1.6 billion. This growth is in line with the firm’s own findings that hyperscalers are currently implementing AMD’s Instinct for inferencing workloads. This trend is attributed to a shortage of accelerators and enhancements in AMD’s ROCm software stack. The company’s revenue growth of 13.69% in the last twelve months and gross profit margin of 53.02% underscore its strong market position as a prominent player in the semiconductor industry.

The firm also noted that long-term strategies of hyperscalers include integrating AMD more significantly into their internal processes. Evercore ISI pointed out that the expected ramp-up of Instinct in the second half of 2025 is presumed to be driven by the launch of AMD’s third-generation solution, the MI350. This anticipated growth trajectory mirrors the successful adoption of AMD’s third-generation server CPU product line, Milan.

Evercore ISI’s analysis indicated that investor expectations for AMD might be modest, referencing a survey they conducted. In light of the recent developments and future projections for AMD, Evercore ISI has raised its estimates for the company and reiterated its Outperform rating. This endorsement comes amid a market environment where AMD is poised to capitalize on the increasing demand for advanced computing solutions, particularly in data centers and AI applications. With analysts forecasting EPS of $4.54 for FY2025 and the stock showing strong momentum, investors seeking deeper insights can access comprehensive analysis and 14 additional key tips through InvestingPro’s detailed research reports, available for over 1,400 US stocks.

In other recent news, Advanced Micro Devices, Inc. (AMD) reported impressive financial results for the first quarter of 2025, surpassing Wall Street expectations with earnings per share of $0.96 and revenue of $7.4 billion, marking a 36% increase year-over-year. Despite the strong performance, AMD faces challenges from new export controls in China, which are expected to impact future revenues by $1.5 billion. KeyBanc Capital Markets maintained its Sector Weight rating on AMD shares, highlighting the company’s robust first-quarter results and positive projections for the MI355 and MI GPUs, despite concerns over the China AI chip ban. Jefferies also retained a Hold rating but lowered its price target from $120 to $100, citing uncertainties in AMD’s AI growth metrics and potential market share loss to competitors like Intel (NASDAQ:INTC). Bernstein analysts kept their Market Perform rating and $95 price target, acknowledging AMD’s strong client and gaming revenue while expressing concerns about datacenter GPU growth and rising operating expenses. These developments reflect a complex landscape for AMD, balancing strong current performance with future challenges in the global market.

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