Advanced Micro Devices (AMD)'s Datacenter Momentum Builds as Goldman Flags Operating Expense Pressure

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 AI Stocks Analysts Are Watching. On February 4, Goldman Sachs analyst James Schneider reiterated a Neutral rating on the stock with a $210.00 price target. Even though AMD reported strong revenue and guidance, the firm noted that it was offset by considerably higher-than-expected operating expense guidance.

The company reported fourth-quarter revenue of USD 10.3 billion, up 34% year over year, and ahead of guidance. Its adjusted earnings per share (EPS) was $1.53, beating consensus expectations of $1.32.

This strong revenue and guidance was particularly driven by upside in AMD’s Datacenter segment. Looking ahead, the company said it expects $9.8 billion in revenue, plus or minus $300 million, versus expectations of $9.38 billion.

Ahead of the earnings report, the research firm noted how investors were constructively positioned on the stock, particularly driven by market strength and share gains in server CPUs, continued strength in AI infrastructure buildouts, and prospects for a robust MI455X ramp in the second half of the year.

Similarly, AMD is likely to continue seeing robust momentum in its Datacenter business throughout 2026. This will be supported by server market share gains and the ramp of its MI400 series products. However, there is limited near-term operating leverage largely owing to the company’s major software and systems investments due to AI infrastructure expansion.

Overall, Goldman Sachs’s Neutral rating is based on limited near-term operating leverage and likely high customer concentration for AMD’s GPU datacenter business. Nevertheless, a more constructive position with increased confidence may be adopted in the coming quarters on the back of AMD’s revenue stream and execution timeline.

Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.

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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Disclosure: None. This article is originally published at Insider Monkey.