AMD Gains 40% Upside as AI Server Demand Accelerates

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•  25 Aug 2026
 

$AMD Advanced Micro Devices returned to the center of attention one day before Nvidia reports, after Raymond James upgraded the stock to Strong Buy and raised its price target to $641 from $565. The target represents about 40% upside from the Monday closing price. The stock rose about 4% in response after falling 3.5% on Monday.

Despite weakness in August, Advanced Micro Devices has gained more than 110% since the start of the year and about 174% over the past 12 months. Those gains remain intact even after the stock declined about 21% from the record set in late June. The upgrade reinforces the institutional flows supporting the stock.

The Raymond James recommendation is based not only on AI accelerators, where Advanced Micro Devices still trails Nvidia, but primarily on the server processor market. The investment firm expects server CPU market revenue to grow at a 44% compound annual rate over the next five years and reach about $201 billion by 2030. Its forecast includes about $33.5 billion from processors for traditional data centers, about $83 billion from CPUs used in AI environments, and about $85 billion from workloads related to Agentic AI.

AI agents do not rely only on graphics accelerators. GPUs perform most of the model computation, while CPUs manage the surrounding process, including information retrieval, database operations, application execution, security, isolated environments, and tool execution. As AI agents become continuously operating systems rather than systems that only respond to individual queries, the number of tasks performed outside the accelerator is expected to increase.

Raymond James expects this shift to become one of the primary drivers of CPU demand in the coming years. Intel, Arm, and Nvidia also have exposure to this growth, but Raymond James views Advanced Micro Devices as the company that best combines direct earnings exposure, a strong data center position, and rising market share. This positioning could strengthen earnings momentum as demand expands.

Advanced Micro Devices was the second competitor to Intel in CPUs and to Nvidia in graphics processors for years. The server market picture has changed, and the company now claims a market share of about 40%, with a target of approaching 50%. Further share gains could support multiple expansion.

Intel is expected to benefit from overall market growth but remains exposed to market share losses. Arm is expected to benefit from higher royalties on server processors, the development of specialized chips, and its planned entry into an independent CPU business. Nvidia is rapidly developing its CPU operations, although Raymond James notes that the segment remains small relative to its AI accelerator business.

Analyst Simon Leopold also raised the Nvidia price target to $352 and maintained a Strong Buy rating. Advanced Micro Devices is also working to narrow the gap in AI accelerators, where Nvidia remains the leader. At its latest Advancing AI conference, the company introduced the Helios system, which combines Advanced Micro Devices GPUs, CPUs, and networking chips with an increasingly mature software layer.

Raymond James believes the technological gap between Advanced Micro Devices and Nvidia is smaller than some market participants estimate. This does not mean that Advanced Micro Devices is overtaking Nvidia, but that it is becoming a more serious alternative for large customers seeking to expand their number of suppliers. That supplier diversification strengthens the positioning implications for the company.

The latest Advanced Micro Devices results were good but not exceptional. The company provided third quarter guidance of about $13 billion in revenue and adjusted earnings of about $1.93 per share at the midpoint, slightly above market expectations. Attention now shifts back to Nvidia, which will report results after the market closes on Wednesday.

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