With Agentic AI accelerating CPU server chip demand, Wall Street believes Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the primary beneficiaries taking share. On September 9, Piper Sandler analyst David O’Connor initiated coverage on AMD with an Overweight rating and a $600 price target.
Analyst O’Connor estimates revenue for FY26-30 to grow at a 50% CAGR, while earnings per share compound at 65%.
AMD’s Bull Case
The server-CPU share gain story for AMD is simple, Agentic AI is expected to increase demand for server CPUs. This is because the workloads require continuous control-plane activity, API calls, database queries and tool execution. AMD will benefit from this use based on its high-frequency and general-purpose processors with its Venice portfolio.
Even AMD executives have highlighted that AMD is now transitioning from merely a semiconductor supplier to a provider of rack-scale systems and software. It is also positioning its server CPU portfolio for increased demand from agentic AI workloads.
The company reported second-quarter revenue of $11.5 billion, beating analyst estimates. This includes $6.7 billion from data centers, up 107% year-over-year. The segment performance was attributed to EPYC processors and Instinct GPUs.
Discussing GPUs, Piper’s note emphasized that the company is ramping Helios, having signed anchor clients in OpenAI, Meta, and Anthropic. Acceleration on both the CPU and GPU fronts has led Piper Sandler to model a revenue growth of 50% CAGR from FY26-30, with EPS compounding faster at 65%, reaching $53 by 2030.
The Bear Case
While AMD’s Data center operating margin reached 31% in the second-quarter, the year-ago quarter included an $800 million export-related inventory charge, overstating the year-over-year margin comparison. The charge was driven by U.S. restrictions on exporting the Instinct MI308 AI accelerator to China, which severely distorted the baseline.
Moreover, large customer commitments such as the one discussed by Piper do validate AMD’s platform. However, they don’t guarantee returns. The firm’s forecasts only become convincing if EPYC and GPU growth comes with sustained margins and strong cash conversions.
Despite this, hedge fund sentiment strengthened sharply for AMD in the second quarter of 2026. 164 hedge funds held stakes in the stock, up from 134 in the prior quarter. The rising interest is in line with AMD’s expanding role in AI accelerators and server CPUs.
Overall, Piper’s $600 target is based on a 24x multiple of fiscal 2028 estimated earnings. While the company has incredible demand evidence, the test now is whether this demand can support faster earnings growth, something investors are likely to see in the next few quarters.
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