AMD Stock Is Rising. Here's Why This Top AI Stock Is a Strong Buy Right Now

The Motley Fool · 2d ago

Key Points

  • Advanced Micro Devices is poised to take market share from rival Intel.

  • AMD is also closing the gap with industry titan Nvidia.

Shares of Advanced Micro Devices (NASDAQ: AMD) climbed on Tuesday, following the release of a highly bullish research report. The semiconductor leader is set to deliver even more gains to its shareholders, according to a respected Wall Street analyst.

A light is shining on an AI chip.

Image source: Getty Images.

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Riding the AI agent wave

Raymond James analyst Simon Leopold upgraded AMD's stock to a strong buy and boosted his share price forecast from $565 to $641. His new price target signifies potential gains of more than 33% for investors who buy shares now.

Leopold sees sales of server central processing units (CPUs) rising by an annualized rate of 44% to a whopping $201 billion by 2030, with most of the gains driven by artificial intelligence agents and other AI applications.

"Agentic workloads represent the largest incremental pool as persistent agents generate orchestration, retrieval, database, sandbox, application, and tool-execution workloads that largely run on CPUs," Leopold said.

While other semiconductor companies will also benefit from these trends, Leopold believes AMD will be the biggest winner.

"AMD offers the strongest combination of direct earnings leverage, data-center positioning, and market-share gains," he said.

Gaining on its rivals

In addition to taking share from Intel in the CPU market, Leopold expects AMD to wrest market share from Nvidia in the graphics processing unit (GPU) arena.

AMD's new Helios rackscale servers -- which combine its CPUs, GPUs, and networking solutions -- should represent a formidable challenge to Nvidia's Vera Rubin platform.

The semiconductor designer's AI infrastructure business is already growing at a torrid clip. Revenue in AMD's data center division soared 107% year over year to $6.7 billion in the second quarter, fueled by strong sales of its EPYC processors and Instinct GPUs.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.