Shares of Advanced Micro Devices (NASDAQ:AMD) experienced a decline on Thursday, even as several major Wall Street firms raised their price targets for the chipmaker. The stock dropped 3.5% to $521.78 in late-morning trading, placing it roughly 10% below its record closing price of $580.91 set on June 30. This pullback has brought AMD's market capitalization to approximately $861.4 billion, down from nearly $947 billion at its peak, according to Barron's.
The sell-off appears to be profit-taking following an extended rally, as noted by Benzinga. However, the underlying debate among investors centers on whether AMD's artificial intelligence (AI) value proposition lies more with its central processing units (CPUs) than its graphics processing units (GPUs). Analysts are increasingly focusing on the company's server CPU business, which they believe could be a key driver of future growth.
Analyst Price Targets Signal Confidence
Despite the stock's dip, several analysts have set new, higher price targets for AMD. Cantor Fitzgerald raised its target to $700 from $500, maintaining an Overweight rating and citing AMD's "greatest momentum in compute" among chip firms. UBS Group increased its target to $670 from $455, with a Buy rating, and raised its 2030 server CPU revenue forecast to $50 billion from $41 billion. Wells Fargo set a target of $615, also Overweight, and now sees 2026 server CPU sales at $16.0 billion, while leaving its data-center GPU forecast unchanged at $15.6 billion.
The wide dispersion in analyst estimates is notable. Cantor's top target implies a potential 34.2% upside from Thursday's close, while the broader consensus among 37 analysts stands at $473, suggesting a 9.3% decline. The most recent three targets average $661.67, indicating a more bullish near-term outlook from the latest updates.
Data Center Revenue Fuels Growth
AMD's first-quarter revenue climbed 38% year-over-year to $10.3 billion, with data-center sales surging 57% to $5.8 billion. Data center now accounts for more than half of total revenue. CEO Lisa Su emphasized that data center has become the primary driver of revenue and profit, with demand for inferencing and agentic AI boosting orders for high-performance CPUs and accelerators.
The company does not break out server CPU revenue separately, creating what analysts call "model risk." Investors must rely on estimates for AMD's EPYC server CPUs within the broader data-center segment. Factors such as EPYC market share, Intel's supply dynamics, and hyperscaler demand can significantly impact the stock.
Meta's AI Compute Capacity in Focus
Meta Platforms (NASDAQ:META), a key customer for AMD's Instinct GPUs and EPYC CPUs, may be exploring a new cloud business to sell excess AI computing power, according to a Reuters report citing Bloomberg News. While Meta declined to comment, Gil Luria at D.A. Davidson suggested that any additional capacity would likely affect neocloud providers more than major cloud companies.
In February, AMD and Meta announced plans to deploy up to 6 gigawatts of AMD Instinct GPUs, with the first batch of 1 gigawatt set to ship in the second half of 2026. Meta CEO Mark Zuckerberg described AMD as an "important partner for many years."
Valuation and Market Context
At current levels, AMD trades at a trailing P/E ratio of 171.2, reflecting high growth expectations. The stock is valued at roughly 21 times its annualized total revenue of about $41.0 billion. UBS's 2030 server CPU revenue forecast of $50 billion is more than double AMD's current data-center run rate of $23.1 billion, underscoring the long-term optimism but also the risk of unfulfilled expectations.
Wall Street is now looking ahead to AMD's second-quarter results, expected around August 4. Analysts project earnings of $1.55 per share on revenue of $11.28 billion, up from 48 cents and $7.68 billion in the same period last year.
