Advanced Micro Devices (AMD) market bulls are out in force following the company’s confidence-inspiring Q1 2025 earnings report last week. The monster semiconductor company had a good quarter, with strong growth compared to last year, intelligent AI and data center initiatives, and strong performance from its core businesses. For investors seeking exposure in tech for relative value and strong near-term growth, AMD is a worthy consideration.
Advanced Micro Devices (AMD) price history over the past 5 days
And so too with Wall Street. Following AMD’s results, several analysts reiterated their Buy ratings, with one analyst, Ingo Wermann from DZ Bank, upgrading his stance from neutral to bullish. Wermann’s price target on AMD stock is currently $118 per share, which is one of the Big Apple’s more conservative estimates. Ultra-bulls like Hans Mosesmann from Rosenblatt Securities expect AMD to reach $200 within twelve months.
AMD’s Stellar Q1 Shines Light on Future Returns
AMD posted a fantastic 36% year-on-year increase in Q1 2025 revenues. The sharp boost has been emphatically attributed to the booming data center market and a significant rebound in client (PC) sales, thanks to their competitive new products like the Zen 5 Ryzen CPUs. These CPUs are flying off the shelves, considerably elevating AMD’s presence in the PC market.
But revenue growth isn’t the only significant factor here. AMD also significantly improved its profitability by posting a 50% GAAP gross margin (up from 47% last year). According to the commentary in AMD’s earnings call, this was due to an improved product mix focused on profitability, particularly data center chips. On a non-GAAP basis, gross margins reached a healthy 54%. Moreover, AMD’s non-GAAP earnings per share increased by 55% year-over-year, reflecting excellent operational growth and cost discipline as the company expands.
Advanced Micro Devices (AMD) revenue, earnings and profit margin history
AMD has achieved a strong mix of more money coming in, along with better profits. CFO Jean Hu mentioned the big boost in earnings from expanding operations, and this financial strength provides a good base for the rest of FY2025.
Macroeconomics Sets the Stage for Growth
The U.S. economy is on course to deliver business-friendly conditions by 2026, with favorable policies in place to encourage growth. Big tax cuts and shrunken regulations are expected to empower businesses to invest more and expand with fewer restrictions. Companies will keep more of their earnings and have fewer regulatory issues, triggering massive investments in AI and cloud computing.
A more favorable business environment for AMD enables customers to pay a premium for server upgrades with AMD’s high-powered processors. At the same time, supply chains returning to the U.S. will benefit AMD by making its products more readily available and its revenues more secure in the long term. Though tariffs can cause short-term contractions, they also enable the gradual development of robust market security measures.
In many respects, tax and deregulation tailwinds will offset any short-term hit from tariffs. In addition, I’m confident the U.S. can strike favorable trade deals with all its international peers, especially its allies. This will significantly reduce the overhang of tariffs on sentiment in the stock market, and we’re already seeing this begin to play out.
Proprietary Model Indicates $175 Price Target
My current model indicates a price target of around $175 per share for AMD within 12 months. To support my estimate, I think AMD can achieve this lofty target given its solid revenue growth, rising profit margins, and favorable position in the market, particularly in profitable segments such as AI and data centers.
Using conservative estimates, AMD should generate ~$37 billion in TTM revenue in the middle of calendar 2026, or about $5.80 in non-GAAP earnings per share. Using a reasonable price-to-earnings ratio of 30 (in light of AMD’s growth and cyclical earnings expansion underway), substantiates my $175 price target.
Advanced Micro Devices (AMD) estimated and reported earnings history
AMD has robust growth in the pipeline, which I believe the market hasn’t adequately priced right now. Therefore, AMD staying rangebound and languishing in post-earnings anxiety (despite a great report) based on transitory macro themes could serve as a timely opportunity. Patient investors with a long-term view can gain exposure to a top-tier stock at a discount, expecting a stock surge in the coming months.
Beware of the Potential Hazards in AMD
No investment is risk-free, and AMD does have some pertinent issues. The most significant risks are regulations that restrict exports of high-end chips, particularly in selling to China. Due to these new export restrictions, AMD is already facing an $800 million charge in the upcoming quarter.
AMD depends heavily on third-party vendors like TSMC (TSM), so supply chain troubles are always a risk factor. Moreover, uncertainty in the PC and gaming markets may cause variability in quarter-over-quarter figures, and intense competition from NVIDIA (NVDA) and Intel (INTC) is always present.
Despite these dangers, AMD’s strengths, solid product family, and alternative revenue streams substantially minimize these concerns.
What is the Price Target for AMD Stock?
AMD has a consensus Moderate Buy rating on Wall Street based on 20 Buys, seven Holds, and zero Sell ratings over the past three months. The average AMD price target is $126.81, indicating almost 17% upside potential over the coming year.
AMD’s recent results and strategic initiatives support a positive outlook for the company. It is well-positioned to benefit from major trends in AI, cloud computing, and a recovering PC market. With continued innovation and expansion into higher-margin segments, AMD presents a compelling opportunity for investors seeking growth in the technology sector.
Backed by a clear strategy and significant market potential, AMD is poised for further progress. The case for a $175 stock price is strengthening, making this an opportune time to consider an investment in AMD.
