AMD Stock Forecast: NASDAQ:AMD Targets $200 With 24% Upside on AI Momentum

NASDAQ:AMD Revenue Momentum Driven by Data Center and AI Expansion

NASDAQ:AMD posted Q2 FY25 revenue of $8.7 billion, up 28% year-over-year, despite post-earnings volatility that saw the stock dip 7%. The driver was the company’s data center business, which grew 14% YoY to $3.2 billion, now 42% of total sales. AMD achieved its 33rd straight quarter of EPYC CPU share gains, underscoring dominance across hyperscalers and enterprise clients. Over 100 new AMD-powered cloud instances went live during Q2, bringing total deployments to nearly 1,200 worldwide. Gross margin excluding charges expanded to 54%, the sixth straight quarter of YoY improvement, signaling a stronger product mix anchored by high-performance data center chips.

AI Accelerator Traction Positions AMD as Nvidia’s Challenger

The Instinct MI350 accelerators are ramping ahead of schedule, securing adoption by seven of the world’s top ten AI model builders. A highlight win was Oracle’s 27,000-node AI cluster, combining MI355X GPUs with EPYC Turin CPUs, delivering up to 40% more tokens per dollar versus competing systems. Sovereign AI deals are scaling, with AMD now engaged in over 40 national-level projects, including a multibillion-dollar deployment with HUMAIN in Saudi Arabia. CEO Lisa Su emphasized that the upcoming MI400 series and the Helios rack-scale system, due for 2026, could unlock “tens of billions in annual AI revenue.”

Export Controls and China Exposure Weigh on Margins

Despite robust demand, AMD faced regulatory drag. Export restrictions on the MI308 to China forced an $800 million inventory write-down, cutting adjusted gross margin from 54% to 43% and flipping data center profits to a $155 million loss, compared with a $743 million profit a year ago. Without restrictions, EPS would have been $0.91, nearly double the reported $0.48. A deal struck mid-August allows resumption of MI308 sales into China, but AMD must give up 15% of revenue to the U.S. government. While this restores as much as $1.5 billion in lost sales, margins will remain compressed. Supply chain adjustments mean an 8–9 month lag before full volume resumes, leaving FY26 exposed.

Valuation Metrics Signal Undervalued Upside

At a forward EPS consensus of $6.01 for FY2026, AMD trades at a multiple below Nvidia despite expanding share in both CPUs and GPUs. Applying a 30x multiple with a 12.5% premium adjustment yields a valuation near $202 per share, about 24% above current levels. Analysts highlight AMD’s more efficient forward ROE and FCF per share growth relative to Nvidia, despite slower topline scaling. Benchmark raised its target to $210 following strong MI355 adoption. The market currently attributes AMD just 4–5% of AI GPU market share, leaving room for incremental gains as ROCm’s open ecosystem offers an alternative to Nvidia’s CUDA lock-in.

ZT Systems Acquisition and Cluster-Level Integration

AMD’s completed acquisition of ZT Systems bolsters its ability to deliver turnkey AI clusters. The integration shortens deployment times for data center-scale AI infrastructure, enhancing AMD’s competitive positioning. The synergy aligns with the Helios platform, projected to deliver 10x generational performance improvements in large-scale AI training. With enterprises constrained by Nvidia’s pricing and supply bottlenecks, AMD’s diversified hardware-software stack provides a differentiated entry point.

Client and Gaming Segments Hold Steady Amid AI Focus

While the spotlight remains on AI, AMD’s Client business is expected to grow sequentially into Q3, albeit at slightly less than seasonal rates. Gaming revenues held steady, though constrained by cyclical softness in consoles. Semi-custom demand is expected to recover into the holiday cycle, providing a cushion as the company doubles down on data center and AI. Operating expenses climbed 32% YoY in Q2 as AMD invested heavily in R&D for frontier AI products, a deliberate margin trade-off to secure market share in a sector projected to exceed $200 billion by FY28.

Technical Landscape and Market Sentiment

From a technical perspective, AMD shares retraced sharply post-earnings but found strong buying support near $160, with the chart structure pointing to resistance around $180–185. A breakout above this zone would open the path toward $200. RSI levels remain neutral after the correction, while volume profiles suggest accumulation rather than distribution. Market sentiment is improving as regulatory overhang eases, with the resumption of Chinese sales mitigating fears of sustained topline erosion.

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