Advanced Micro Devices, Inc. (NASDAQ:AMD) has received a significant boost as Raymond James has initiated coverage with an “Outperform” rating and set a price target of $337.00. This endorsement comes amid growing interest in AMD as a key player in the artificial intelligence (AI) sector, fueled by a projected $15 billion AI pipeline by 2026.
Raymond James analysts believe that AMD stands to benefit substantially from the surging demand for AI technologies. They cite recent developments, such as deployments by OpenAI, which are expected to enhance the adoption of AMD’s graphics processing units (GPUs) and contribute to market share gains. The firm views AMD as a strong contender against its main competitor, Nvidia, particularly in the GPU market, and anticipates “continued momentum” in both accelerators and AI rack systems.
AMD’s Position in the AI Market
As a leading vendor of central processing units (CPUs), accelerated processing units (APUs), and GPUs across various markets, AMD is actively expanding its product offerings, including platforms and software tailored for AI applications. Despite lingering skepticism from some investors, the stock has garnered interest from a broader audience compared to previous periods.
Analysts at Raymond James also expressed confidence in AMD’s fundamentals, predicting that they will improve in alignment with the company’s growth trajectory. Notably, recent contracts with OpenAI and Humain, expected to yield around 1 gigawatt of power, could contribute to an estimated $15 billion in revenue by 2026, with projections of growth to over 2 gigawatts in 2027.
Future Prospects and Market Dynamics
The firm anticipates that deployments from OpenAI will serve as a critical endorsement, encouraging other organizations and hyperscalers to consider AMD GPUs for their AI needs. The analysts project that AMD will deliver 190,000 MI350 chips and 915,000 MI450 chips in fiscal year 2027, supporting its expected share gains in the server and PC markets.
The potential for growth in the AI total addressable market (TAM) is considerable, with analysts suggesting that it can accommodate multiple chip suppliers. AMD is poised to be one of these participants as it capitalizes on the burgeoning demand for AI solutions.
In summary, the upgrade by Raymond James signals a positive outlook for AMD, highlighting its strategic position within the rapidly evolving AI landscape. The firm’s price target of $337 reflects a strong belief in the company’s ability to deliver substantial returns to investors in the near future.
