Keep an eye on Advanced Micro Devices (NASDAQ: AMD). AMD is scheduled to report earnings after the closing bell on Aug. 4, and bullish analysts believe the stock could have more room to run. Among the most bullish firms is UBS, which recently set a $670 price target on AMD shares. The firm argues that the next leg of AI investment won’t be powered exclusively by graphics processing units (GPUs), but also by central processing units (CPUs), which play a critical role in supporting emerging agentic AI applications.
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In fact, according to AMD, “As agentic AI activity grows, high-performance CPUs coordinate workflows, process and move data, and manage the many operations that occur around the model.” Better, according to AMD CFO Jean Hu, CPUs could become one of the biggest beneficiaries of the AI boom, describing demand driven by agentic AI as “tremendous,” according to Seeking Alpha.
UBS believes the transition toward agentic AI will increase demand for standalone CPU racks inside AI data centers, creating a significant opportunity for companies with leading server processor portfolios.
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The bullish outlook comes as Advanced Micro Devices continues to post strong financial results fueled by growing enterprise AI adoption.
During the first quarter, AMD reported revenue of $10.3 billion, up 38% from a year earlier. Its Data Center segment generated $5.8 billion in revenue, representing 57% year-over-year growth and reinforcing the division’s position as the company’s largest growth driver.
Looking ahead, Advanced Micro Devices forecasts second-quarter revenue between $10.9 billion and $11.5 billion. The midpoint of $11.2 billion exceeded Wall Street expectations of approximately $10.52 billion, signaling continued momentum across its AI-related businesses.
“We delivered an outstanding first quarter, driven by accelerating demand for AI infrastructure, with Data Center now the primary driver of our revenue and earnings growth,” AMD Chair and CEO Lisa Su said in the company’s earnings release.
The CEO added that demand continues to strengthen as inferencing and agentic AI expand the market for high-performance CPUs and AI accelerators.
“We are seeing strong momentum as inferencing and agentic AI drive increasing demand for high-performance CPUs and accelerators,” Su said. “Looking ahead, we expect server growth to accelerate meaningfully as we scale supply to meet demand. Customer engagement around MI450 Series and Helios is strengthening, with leading customer forecasts exceeding our initial expectations and a growing pipeline of large-scale deployments providing us with increasing visibility into our growth trajectory.”
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There are two near term catalysts at play here. One, while investors have spent the past two years focusing largely on GPUs, Wall Street is beginning to recognize that CPUs are expected to play a larger role. That evolving story could provide another growth catalyst for AMD.
Two, earnings and guidance are nearing. Investors will be looking for management’s commentary on adoption, AI infrastructure spending, and demand.
If Advanced Micro Devices delivers another quarter of solid numbers while reaffirming its outlook for AI-driven growth, the earnings report could reinforce Wall Street’s increasingly bullish view of the company. With expectations running high, the focus may ultimately be less on the headline numbers and more on whether management can convince investors that Advanced Micro Devices is positioned to benefit from the next chapter of the AI revolution.
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