Truist Upgrades AMD (AMD) to Buy, Sees Major AI Growth Potential

Advanced Micro Devices Inc. (NASDAQ:AMD) is one of the top 10 mega-cap stocks to buy according to hedge funds. On August 26, Truist analyst William Stein upgraded Advanced Micro Devices Inc. (NASDAQ:AMD) from Hold to Buy and raised the price target from $173 to $213. As of September 3, the stock was trading at $161.52, which means the new price target implies an upside of 31.87%.

According to the analyst, customers are finally starting to take AMD seriously. Instead of just being a backup option or a bargaining chip against Nvidia, AMD is now being considered for some pretty large AI projects.

Stein argued that AMD’s situation today is a lot like when it first started gaining traction in the server chip space. Back then, it had less than 1% of the market until the launch of its “Rome” chips, which helped it grab a bigger slice as Intel ran into issues.

Looking ahead, the analyst thinks AMD could eventually grab about 10% of the burgeoning GPU market, compared to the current 6%. He’s also raised his earnings forecast and now sees AMD earning $7.89 per share by 2027. To put that in context, the current year EPS estimates stand at $3.85 per share. Stein expects that to more than double in two years as the company is expected to grow its revenue as well as expand margins. A big part of that confidence comes from AMD’s new MI355 chip, which he expects will play a major role in the company’s growth moving forward.

While we acknowledge the potential of AMD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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