AMD (AMD) is set to report its fiscal fourth-quarter results on Feb. 3, and while the company will likely show strength in its “traditional” products, there is uncertainty about its artificial intelligence offerings, Wedbush Securities said.
“We expect AMD should be able to at least modestly exceed Q4 estimates given strong demand for both PC and server compute, with this backdrop providing room for both sales and margin upside assuming AMD optimized shipments,” Wedbush analyst Matt Bryson wrote in a note to clients. “And continued tightness entering Q1 for both categories should provide AMD with further room for upside, particularly with server CPU pricing seemingly set to rise double digits and with AMD having more time to optimize product mix to maximize results.”
Bryson, who has an Outperform rating and $290 price target on AMD, said the company’s valuation is largely tied to its current and future AI products. And while he believes in AMD as a competitor to Nvidia (NVDA), there is the question of how much upside there is.
“Upside unit opportunity and stronger pricing in what was already AMD’s highest margin product set (with conditions seemingly set to continue well into 2026, if not through this year into 2027 given tight fab capacity) should create a more clear path to gross margin and profit growth through 2026,” Bryson explained. “Moreover, if AI products should slip (particularly modestly), greater server CPU shipment opportunity should only provide room for AMD to reallocate supply chain commitments to better support this upside (a result that would also prove more beneficial to profitability vs. a more significant AI ramp).”
And with China “seemingly on track to green-light some AI-related shipments,” there is also the potential for incremental demand from the country, Bryson added.