Why Nvidia rival AMD may see a 40% rip in its stock

Why Nvidia rival AMD may see a 40% rip in its stock

Brian Sozzi · Executive Editor

Tue, August 25, 2026 at 7:47 PM GMT+3 3 min read

• AMD +4.22%
• NVDA +1.60%

A screaming buying opportunity may exist in AMD (AMD) after a post-earnings sell-off earlier this month.

Raymond James analyst Simon Leopold upgraded his rating on AMD to Strong Buy from Outperform in a new note on Tuesday. He lifted his price target to $641 from $565, which assumes neatly 40% upside from current price levels.

The new price target puts Leopold above the average price target of his peers at $613, per Yahoo Finance AlphaSpace data. About 72% of Wall Street analysts that cover AMD rate the stock a Strong Buy or Buy.

AMD stock rose 5% in afternoon trading in response.

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Leopold thinks AMD, with its powerful AI chips, will be a key player in the agent-driven workforce. Moreover, he sees the server central processing unit (CPU) market increasing at a 44% five-year compound annual growth rate to about $201 billion by 2030.

"AMD offers the strongest combination of direct earnings leverage, datacenter positioning and market-share gains," Leopold said.

The chipmaker has had a series of wins this summer.

AMD beat Wall Street expectations across the board for the second quarter earlier this month, posting record non-GAAP earnings per share of $1.66 versus consensus estimates of $1.61. Total revenue surged 50% year over year to a record $11.5 billion, clearing analyst projections of approximately $11.34 billion.

The strong top- and bottom-line performance was fueled by the company's Data Center segment. Revenue more than doubled year over year to $6.7 billion behind robust demand for EPYC server CPUs and Instinct AI accelerators.

AMD projected second-half 2026 server CPU revenue to grow 80% year over year and 70% in 2027. It expects data center revenues to more than double in 2027, with AI graphics processing units (GPUs) growing well over 100%.

AMD also unveiled its next-generation AI chips, headlined by the Instinct MI450 Series GPUs and the 6th Gen EPYC Venice CPUs. The new chips are designed to power AMD's new Helios rack-scale AI systems, which combine GPUs, CPUs, networking, and software into an integrated platform for training and running large AI models.

The product announcement came alongside two important new deals.

AMD said Microsoft (MSFT) will deploy Helios across Azure AI services beginning in the second half of 2026.

It also announced a major tie-up with Anthropic (ANTH.PVT) that significantly expands its push to challenge rival Nvidia in the AI infrastructure market.

Anthropic plans to deploy up to 2 gigawatts of the Instinct MI450 GPUs in its Helios system beginning in the first half of 2027 — a deal that could be worth tens of billions of dollars over time. AMD also committed to invest up to $5 billion in Anthropic, marking one of the chipmaker's largest strategic investments ever.

Demand for AI chips is exceptionally strong, AMD CEO Lisa Su told Yahoo Finance in a late-July interview (video above).

"We're seeing the returns on investment," Su said. "Demand for compute is at a premium today. … We are very confident in the demand picture being there."

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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