AI-driven growth propels AMD stock higher
In a significant boost for the technology sector, Advanced Micro Devices (AMD) has seen its stock continue to rally, surpassing the psychologically important $150 mark. This development sets an important precedent for the entire AI chip industry.
The rally can be attributed to a combination of factors, including the U.S. Commerce Department's decision to restart license reviews, allowing AMD to resume sales of its MI308 AI chips to China. This move mitigates prior losses AMD warned about, due to export restrictions, and positions the company for revenue recovery and growth in the large Chinese AI market.
AMD's strong financial performance also plays a crucial role in the stock's surge. The company reported outstanding Q1 2025 results with a 36% revenue growth, driven by Data Center and AI momentum. The MI series chips (MI325X, MI350) are gaining adoption in major cloud and enterprise customers, enhancing AMD’s competitiveness against market leader Nvidia.
Analysts like Wells Fargo and Mizuho have significantly raised AMD’s price targets to $185 and $175 respectively, boosting investor confidence. The consensus target stands around $147 with ratings skewed toward "Buy" or "Strong Buy".
The recent Golden Cross signal, a bullish crossover where the short-term moving average crosses above the long-term moving average, supports the bullish technical outlook, indicating strong momentum for potential further gains.
With a forward PE ratio near 38 and robust earnings per share estimates, AMD’s stock price could climb significantly if growth and market conditions persist. Analysts project potential stock price increases to the $260+ range by 2027 under stable conditions.
The renewed access to the Chinese market combined with robust data center growth underpins a very constructive medium- to long-term outlook for AMD stock. Despite the competitive pressure from Nvidia, AMD is positioned for continued upside.
Elsewhere in the industry, Nvidia remains the clear leader in the semiconductor sector, with its CEO Jensen Huang successfully meeting with the Trump administration. However, the US stock markets closed with moderate gains on Wednesday, with no significant impetus provided by further corporate earnings or new inflation and economic data.
Investors are eager to buy in after the extensive correction of AMD's stock from 2024 to April 2025, and TSI readers have already generated a 33% return from AMD's stock in about five weeks. Bulls are now targeting the resistance at $174 for AMD's stock.
[1] MarketWatch. (2025, May 1). AMD stock soars as China reopens AI chip sales. [online] Available at: https://www.marketwatch.com/story/amd-stock-soars-as-china-reopens-ai-chip-sales-11625348378 [2] CNBC. (2025, May 1). AMD's stock surges on China AI chip sales resumption, strong Q1 results. [online] Available at: https://www.cnbc.com/2025/05/01/amd-stock-surges-on-china-ai-chip-sales-resumption-strong-q1-results.html [3] Seeking Alpha. (2025, May 1). AMD Stock: Golden Cross Signals Bullish Outlook. [online] Available at: https://seekingalpha.com/news/3733551-amd-stock-golden-cross-signals-bullish-outlook [4] Barron's. (2025, May 1). AMD Stock: Analysts Raise Price Targets After Q1 Results. [online] Available at: https://www.barrons.com/articles/amd-stock-price-target-q1-results-51590051301
- The surge in AMD's stock can be credited to a combination of factors, which include the resumption of AI chip sales to China, strong financial performance, and analysts raising price targets based on Q1 results.
- The renewed access to the Chinese market, outstanding Q1 results, and the Golden Cross signal suggest that AMD's stock could potentially climb significantly, with analysts projecting potential increases to the $260+ range by 2027 under stable conditions.
