Advanced Micro Devices (NASDAQ:AMD) hasn’t had the smoothest ride since its earnings release last Tuesday. While the results weren’t exactly disastrous, the stock has slipped nearly 9%, suggesting investors were hoping for a bit more spark in the outlook. It’s one of those cases where the numbers looked solid on paper, just not enough to sustain market enthusiasm, especially after a 133% surge over the past six months.
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Cantor analyst C.J. Muse, who ranks among the top 1% of stock experts on Wall Street, describes AMD’s earnings report as a “mixed guide,” noting that it featured “modestly better revs, modestly worse EPS.”
Muse’s key conclusion is to “not lose sight of the forest from the trees,” particularly with a potential catalyst coming up on Tuesday, November 11.
“AMD is attacking the fastest-growing AI compute market with an Analyst Day that should underscore a very strong earnings power scenario for the company, where we see EPS of $20 in a $3T AI Infrastructure world into the 2030 timeframe,” the 5-star analyst explained.
In the near term, Muse notes several positives. First, traditional Server CPU demand is stronger than expected, supported by AI, with management seeing this as sustainable. Second, the AI GPU business’ momentum remains intact, showing double-digit year-over-year growth, with CY25 revenues on track to reach Muse’s $6.5 billion estimate and expected to surpass CPU revenue in the second half of 2026. Third, the overall x86 franchise is gaining share from Intel, with Data Center and Client CPU revenues anticipated to grow 32% and 47% in CY25, respectively. Finally, the Embedded business appears to be “bottoming.”
However, challenges remain. Muse points to continued pressure on AI GPU gross margins as the business transitions to Helios rack scale. The analyst also notes that rising R&D spending will push operating expenses to grow faster than revenue in CY25, which could limit earnings expansion despite the company’s strengthening fundamentals.
Looking forward, attention turns to 2026 and 2027’s earnings potential, driven by the timing and scale of MI350/400-series ramps and the associated gross and operating margins.
“We have been discussing $10 in earnings power into the 2027 timeframe, and we continue to believe this holds true,” Muse summed up.
Accordingly, Muse assigns AMD an Overweight (i.e., Buy) rating, backed by a Street-high $350 price target. The implication for investors? Upside of 50% from current levels. (To watch Muse’s track record, click here)
Elsewhere on the Street, the stock claims an additional 26 Buys and 10 Holds, for a Moderate Buy consensus rating. The forecast calls for one-year gains of 19%, considering the average price target stands at $278.09. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.