Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) will report its second quarter earnings next week, and Bank of America analysts expect the chipmaker to deliver results ahead of consensus, driven by strength in its core CPU and GPU businesses and favorable pricing dynamics in AI products.
The bank’s analysts repeated their ‘Buy’ rating on AMD shares and raised their price objective to $200 from $175, citing a stronger AI CPU and GPU environment.
They expect upside to second- and third-quarter results and guidance, with sales of over $7.5 billion and $8.5 billion, respectively, compared to consensus estimates of $7.4 billion and $8.3 billion.
For calendar year 2025, they see sales and EPS reaching more than $33 billion and $4.10, compared to the consensus of $32.2 billion and $4.01.
The analysts expect AMD’s overall CPU share to top 30% by 2026 from less than 20% in 2023, pointing to Intel’s declining share and manufacturing uncertainty as a key opportunity.
“Particularly, Intel's prioritization of profitability and uncertainty regarding manufacturing offers greater opportunity for AMD to gain CPU share,” they wrote.
“We also flag AMD now has a comfortable Average Selling Price (ASP) premium over Intel, 17% on average in PCs, 64% in servers.”
On the AI front, analysts highlighted robust demand and improving average selling prices. They project AI GPU revenue closer to $7.5 billion in 2025 and $12 billion in 2026, well ahead of consensus expectations of $6.6 billion and $10.4 billion, respectively.
“If sales potentially resume in August, we expect $0.7 billion to $1 billion increment to the $6.5 billion GPU forecast for 2025, and $1.5 billion to $2 billion increment to the $10 billion consensus baseline for 2026,” the analysts wrote, referencing the potential resumption of MI308 AI GPU shipments to China in the second half of 2025.
Concerns about a potential slowdown in the PC market may already be reflected in expectations. The analysts noted that Street estimates for AMD’s client segment show modest growth of just 2% in Q3 and flat in Q4, far below the typical seasonal increases of 15% and 14%, with the company’s second-half PC outlook already tracking 1,300 to 1,400 basis points below normal seasonal trends.
AMD will hand down its Q2 earnings report on August 5 after markets close.