5-star analyst resets AMD stock price target, but it's not about GPUs
Advanced Micro Devices, Inc. (AMD) closed the month of June at $580.91, up 7.68% in the last session, and hit a new 52-week high of $584, giving the company a market cap approaching $950 billion. The stock is up 171.25% year-to-date and 309.38% over the past year, according to Yahoo Finance. What I ...
Overview
Advanced Micro Devices, Inc. (AMD) closed the month of June at $580.91, up 7.68% in the last session, and hit a new 52-week high of $584, giving the company a market cap approaching $950 billion. The stock is up 171.25% year-to-date and 309.38% over the past year, according to Yahoo Finance.
What I keep noticing in the 57-year-old AMD coverage is that the GPU narrative tends to dominate the headlines. Looking at this other side of the server CPU story, which is arguably the more structurally significant development, keeps getting underappreciated.
The Wells Fargo analyst's latest note goes directly at that gap. The firm raised its AMD price target while maintaining its Overweight rating, citing a meaningful revision to its server CPU revenue estimates.
The full target and the specific numbers tell the story, and I will get into both.
Also Read: History of AMD: Timeline and Facts
What Wells Fargo's revised estimates actually show
5-star Wells Fargo analyst Aaron Rakers raised its AMD server CPU revenue estimates substantially, now modeling $16.0 billion for 2026, $20.5 billion for 2027, and $25.0 billion for 2028, according to the firm's note shared with TheStreet.
Aaron Rakers is a 5-star analyst who ranks 8th out of 12,338 Wall Street analysts and 12th out of 28,995 experts, with a 73% success rate and a 59.40 average return.
The trajectory from $16 billion to $25 billion in just two years is an honest reflection of a thesis that AMD's EPYC server CPU business is entering a prolonged share-gain cycle. Not just a single-product cycle bump.
More AMD:
- AMD CEO Lisa Su drops rare message on AI careers
- Bank of America resets AMD stock price target
- AMD CEO makes bold move to boost AI in key market
The firm set its new price target at $615, up from $505, using a 33 times price-to-earnings multiple on its 2028 EPS estimate of $18.75, according to the note. Wells Fargo projects 2026 EPS of $7.15 and 2027 EPS of $13.40, implying a near-doubling of earnings power in just two years.
Data center GPU estimates were kept unchanged at $15.6 billion in 2026, $40.6 billion in 2027, and $63.0 billion in 2028, which tells me the firm is making a specifically incremental bull case on CPUs, not just riding the GPU momentum that other analysts have been emphasizing.
My read of that distinction is this important. If the GPU numbers already reflect the AI acceleration story, then the CPU revision is where the new earnings upside lives. And yes. That is exactly the market dynamic that makes this note meaningful rather than just a routine target increase.
Also Read: AMD’s stock split history (& prospects) explained
The AMD Venice ramp is the product catalyst behind the estimate revision
On May 21, AMD confirmed that its 6th Generation 2nm EPYC Venice server CPUs have entered the production ramp, with volume scaling expected through the second half of 2026.
Details
In the report, AMD noted it has more customers validating and ramping Venice than any prior EPYC generation. Of course, that’s a statement that signals broad enterprise and hyperscaler commitment rather than just one or two anchor deployments.
Also Read: Advanced Micro Devices Inc. Latest News and Stories
The follow-on Verano platform, also 2nm, is expected in 2027 with a focus on AI performance per dollar per watt, the economic metric that matters most to hyperscalers managing massive infrastructure costs. AMD noted.
AMD also increased its Server CPU Total Addressable Market (TAM) estimate to $120 billion by 2030 last quarter, according to Dr. Lisa Su, Chair and CEO of AMD, in the Q1 2026 earnings call transcript by Seeking Alpha. Wells Fargo's $25 billion 2028 revenue target implies AMD is positioning for roughly 20% of that TAM within four years.
Related: Does AMD pay dividends? How the chipmaker spends its money
Meta has committed to deploying up to 6 gigawatts of AMD Instinct GPUs, with the first gigawatt running on a custom MI450-based GPU, according to AMD's press releases. Meta will also be a lead Venice Customer.
AWS, Google Cloud, Microsoft Azure, and Tencent have all expanded EPYC-powered cloud instances, according to AMD's Q1 fiscal 2026 earnings report. In fact, the hyperscaler validation across the full customer base is what gives the Wells Fargo CPU revenue ramp its credibility.
AMD's Q1 2026 results and Q2 guidance also frame the earnings trajectory
AMD's first-quarter 2026 results, reported May 5, according to AMD’s earnings release:
- Total revenue of $10.3 billion, up 38% year over year (YOY)
- Data Center revenue of $5.8 billion, up 57% YOY
- Non-GAAP EPS of $1.37
- Record quarterly free cash flow
We are seeing strong momentum as inferencing and agentic AI drive increasing demand for high-performance CPUs and accelerators.
Dr. Lisa Su continued, according to the Q1 2026 earnings report. "Customer engagement around MI450 Series and Helios is strengthening, with leading customer forecasts exceeding our initial expectations."
For Q2 fiscal 2026, AMD guided for revenue of approximately $11.2 billion, up roughly 46% year over year, with a non-GAAP gross margin of approximately 56%, according to the AMD outlook.
Now hear this. The sequential step from $10.3 billion to $11.2 billion, against a setting where Venice is accelerating and hyperscaler deployments are scaling, sets up the second half as the period where Wells Fargo's revised CPU estimates begin to show in the reported numbers.
Where Wells Fargo's target sits in the analyst landscape
Wells Fargo's $615 target is not the most aggressive one we have had.
- Cantor Fitzgerald holds the highest target at $700, raised on June 29, and citing the compute market momentum, according to TipRanks
- UBS targets $670, according to TheStreet
- Bank of America’s $500 target, according to TheStreet
- Goldman Sachs upgraded to Buy at $450 from $240 on structural agentic AI tailwinds, according to TheStreet
The range from $450 to $700 tells the story of a stock where analyst consensus is still forming around what the server CPU opportunity actually means for long-term earnings power.
Wells Fargo's $615 target, grounded in specific CPU revenue estimates through 2028 rather than just TAM optimism, sits in the more analytically rigorous part of that range.
AMD trades at a premium that reflects high expectations. What Wells Fargo is arguing is that those expectations, at least on the CPU side, may still be underestimating what Venice and Verano can deliver.
Related: Bank of America resets AMD stock price target
Source
Originally published at www.thestreet.com.
