Bank of America upgraded Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) to Buy after its first-quarter results, highlighting strong growth potential in AI chips, gains in PCs and servers, and an attractive valuation.
The bank raised its price objective to $120 from $105, implying roughly 22% upside from AMD’s Monday closing price of $98.62.
Analysts forecast a more than 20% compound annual growth rate for both revenue and earnings per share through calendar year 2027, and see the shares trading at just 18 times estimated 2026 earnings—or 0.8 times PEG, a discount to peers given its growth trajectory.
“We find risk-reward compelling and upgrade AMD to Buy,” the analysts wrote, pointing to a series of catalysts including AMD’s $6.2 billion AI chip sales target for 2025—up 23% even with a $1.5 billion China hit—which they believe is achievable or even beatable, especially with the new MI350 accelerator launching later this year.
The team’s bullish case comes despite growing concerns around China-related AI export restrictions and intensifying competition from Nvidia Corp. and ARM-based chipmakers in both GPUs and CPUs.
AI, PC strength drive growth outlook
AMD’s first-quarter earnings beat and a robust second-quarter sales forecast of $7.4 billion, roughly 10% above BofA’s prior estimate, have helped to ease earlier investor concerns about exposure to China and Nvidia’s dominance in the GPU market.
Beyond AI, AMD continues to benefit from strong average selling prices and increasing market share in PCs. BofA now estimates AMD’s average selling price for PC CPUs at $143—higher than Intel’s $133—for only the second time in history, and expects AMD’s PC value share to climb to 24.5% in 2025, up from 13.4% in 2023.
In the data center space, BofA’s revised $6.2 billion GPU sales forecast for 2025 takes into account a $1.5 billion headwind from China restrictions, yet remains broadly in line with prior expectations. Analysts see upside as AMD ramps production and launches the MI350, which could help close the performance gap with Nvidia.
Margins, EPS outlook raised
Bank of America also sees potential for operating margin expansion, forecasting AMD’s EBIT margin to rise to 30% in 2027 from 22% in 2025. As a result, the firm lifted its adjusted EPS estimates by 4% to $3.80 for 2025, 6% to $5.60 for 2026, and 11% to $6.81 for 2027.
Still, the analysts acknowledged some skepticism among investors. “Bears will likely point to near-term beats coming from consumer PC/gaming, perhaps from tariff pull-ins, but we believe the beats are more from better mix (more ASP than units) and share gains,” they wrote.
Gaming volatility, competition seen as risks
Despite the upgrade, BofA cautioned that AMD’s gaming segment remains prone to “quarterly demand volatility,” with recent strength potentially reflecting short-term inventory shifts due to tariffs rather than sustained demand. The analysts also noted that AMD remains a “distant #2 in GPU,” with its roadmap still trailing Nvidia’s by about a year, and highlighted ARM’s rapid progress in PC and server CPUs, particularly for specialized workloads.
Even so, with multiple growth drivers in play—from AI and PCs to server acceleration—BofA sees AMD well-positioned to outperform in the years ahead.
