Wall Street is gradually embracing "CPU is king"! Agent AI drives demand surge, and analysts are raising AMD target prices

According to Zhitong Finance, AMD (AMD.US) saw its stock price surge after releasing its earnings, and Wall Street is showing optimism as well. Analysts pointed out that, judging from AMD’s performance and guidance, the company led by Lisa Su is one of the primary beneficiaries of the rise of agent Artificial Intelligence. In the field of agent artificial intelligence, the demand for CPUs is now as high as the demand for GPUs during the rise of generative artificial intelligence (and still is). Therefore, Wall Street is gradually coming to terms with the reality that CPUs are reigning.

Wedbush Securities analyst Matt Bryson gave AMD an "Outperform" rating and raised the target price to $450 from $400 after the earnings release.

In a report to clients, Bryson wrote: "AMD delivered strong first-quarter results, mainly due to server computing income surpassing expectations (over 50% year-on-year growth), and management expects second-quarter sales to accelerate further (about 70% year-on-year growth). The acceleration is driven by increases in both shipments and average selling prices, with demand largely attributed to computer racks supporting agent artificial intelligence. Management said AMD expects this trend to continue driving the growth of AMD’s server CPUs through 2026 and even into 2027."

Jefferies analyst Kevin Garrigan stated that while server CPUs have stolen the spotlight and drawn much attention, the company’s GPU business appears poised to take a significant step forward.

In his report to clients, Garrigan wrote: “On GPUs, the MI450/Helios remains on track for mass production in the second half of 2026 (initial shipments in Q3, significant growth in Q4), and forecasts from major clients have now exceeded their initial plans. The client base continues to expand, and AMD has expressed confidence in achieving more than 80% long-term data AI compound annual growth rate over the next few years.”

He noted that although data center AI revenue slightly declined quarter-on-quarter, both server CPU and data center AI revenue are expected to achieve double-digit percentage growth this quarter.

"The market outlook for server CPUs is brighter, but mass production of MI450/Helios remains key," Garrigan added. He reiterated his "Buy" rating on AMD and raised the target price from $300 to $415.

Nevertheless, CPUs remain the star product of this event. Lisa Su stated that the company is witnessing “significant” growth in CPUs and expects the market to grow at a 35% annual rate, reaching $120 billion by 2030.

Morgan Stanley analyst Joseph Moore wrote in his report to clients: “Given the stock’s sharp volatility, we originally assumed the market’s enthusiasm for servers was already reflected in the price, but in the past few weeks, market passion for CPUs seems insatiable, and management’s long-term commentary may have more impact than modest short-term gains.”

After AMD released its earnings, Moore raised AMD’s target price from $360 to $410. He said, “The world has changed,” and although Intel (INTC.US) has faced some issues, AMD remains in a “very strong position” in terms of gaining market share.

“Intel has said that having their own fabs allows them to gain share, but AMD seems to outright reject that view, expressing great confidence in their own supply chain to meet market demand, while reiterating their intention to hold the majority market share (including ARM) by 2030,” Moore added. “We believe in AMD’s CPU prospects.”