Bank of America supports AMD (AMD.US): Demand for servers is booming, Helios AI racks bring new growth points

The Zhitong Finance App learned that the Bank of America stated in its semiconductor market weekly outlook report that AMD (AMD.US) will achieve quarterly results that exceed expectations and raise guidelines due to “abnormally strong” demand for server processors. The bank reaffirmed AMD's “buy” rating and raised the target price from $550 to $620.

Bank of America analyst Vivek Arya said in the research report: “Benefiting from the continued growth in EPYC (Xiaolong) processor market share, strong cloud demand, and stable supply prospects, we expect AMD to exceed expectations and achieve upward guidance. The company's third-quarter results guide may include the shipment volume of the first batch of Mi455x 'Helios' rack servers, and the scale of shipments will rise sharply in the fourth quarter (revenue for a single quarter is expected to reach more than 6 to 7 billion US dollars at the end of the fourth quarter). Given that AMD has the broadest portfolio of artificial intelligence CPUs, and its sixth-generation EPYC Venice processor will also be released along with Helios in the third quarter, management may further emphasize that intelligent AI will benefit the CPU business. The server CPU market size given by management in May was $120 billion, and they are likely to raise this figure again.”

AMD will announce its second-quarter results after the US stock market on August 4, which is regarded as one of the highlights of the August “Computing Power Chain” performance disclosure. Prior to that, AMD will hold a General Conference in San Francisco from July 22 to 23, which will showcase the latest AI infrastructure, architecture, and development technology. According to reports, the central focus of the conference was the first rack-level AI system launched in AMD's history — the Helios platform based on the Instinct MI455X GPU.

As for other chip companies, Arya said that for Intel (INTC.US), stronger pricing, especially in the server market, may offset concerns about the weakness of the PC market.

Arya added, “Investors' focus is likely to remain on product margin prospects (operating margins in the first quarter were about 600 basis points higher than the 2025 average) and the progress of the foundry business (several 18A-P and 14A customer cooperation projects are ongoing), and developments related to the upcoming 18A process server Diamond and Coral Rapids projects are critical to Intel's server market share prospects (we expect market share to reach 24% by 2030, compared to 41% in 2025).”

Arya said that Arm (ARM.US) may be adversely affected in the short term due to the weakness of the smartphone market, but its move into the server market will provide performance support in the second half of this year.

He said, “Short-term licensing revenue is mainly determined by mobile phone shipments, and smartphone sales may drop by more than 10-15% year on year in 2026, and it will be difficult to achieve a substantial recovery in 2027. The mobile architecture upgrade bonus (from v8 architecture iteration to v9, CSS architecture) has basically been realized; major server CPU orders such as Google Axion and Microsoft Cobalt may not contribute to performance until the second half of 2026 to 2027. The medium- to long-term general artificial intelligence (AGI) CPU supply and demand gap may become a key variable: the company's management expects the market demand to reach 2 billion US dollars in the 2027-2028 fiscal year, but the supply is only 1 billion US dollars, and overall AI CPU demand continues to improve.”

It is worth noting that the semiconductor sector in US stocks recently pulled back sharply, and Bank of America continues to be optimistic about this sector. The bank said in last week's report that after surging 88% in the second quarter, the Philadelphia Semiconductor Index experienced an 11% correction in the third quarter, which coincided with the pattern of seasonal weakness in the sector's history. It was a “healthy reset” rather than a trend reversal.