Advanced Micro Devices Inc. (AMD) shares jumped more than 4% on Tuesday after a handful of Wall Street analysts raised their price targets, adding fuel to the already hot narrative around the chipmaker's artificial intelligence and server businesses. The broader semiconductor sector also got a lift, with the Nasdaq up 1.35% and the S&P 500 rising 0.42%, making technology the best-performing sector of the day.
The rally was sparked by a series of bullish analyst notes. KeyBanc analyst John Vinh maintained an Overweight rating and boosted his price target on AMD to $725 from $530 — a nearly 37% increase. Vinh highlighted that AMD has secured additional server CPU capacity, which should support unit growth of 15% to 20% this year and more than 50% in 2027. He also expects the company's MI455 AI GPUs and Helios platform to ramp up in the second half of 2026, forecasting AI GPU revenue of $16.8 billion in 2026 and $48.5 billion in 2027. On the supply side, KeyBanc noted that AMD's CoWoS advanced packaging supply has increased from 80,000 to 90,000 units this year and could reach 130,000 next year, easing some of the AI supply constraints that have been a concern.
Bank of America analyst Vivek Arya also raised his price target to $620 from $550, while TD Cowen analyst Joshua Buchalter increased his forecast to $675 on Monday. The upgrades reflect a growing consensus that AMD is well-positioned to capture a larger share of the AI chip market, which has been dominated by Nvidia.
The stock's gains weren't just about analyst upgrades. Hedge funds have also been piling back into semiconductor stocks. According to Goldman Sachs data shared by The Kobeissi Letter, hedge funds bought U.S. semiconductor stocks last week at the fastest pace in at least three-and-a-half years. That buying spree followed two weeks of heavy selling, suggesting that institutional investors believe the recent pullback in chip stocks is largely over. Semiconductor companies now account for about 10% of total hedge fund exposure, roughly double last year's level but still below the nearly 14% peak reached in May.
AMD shares were trading at $556.58 at the time of publication, up 4.15% on the day. The stock has been volatile this year, but the latest wave of bullish sentiment suggests that Wall Street sees a lot more room to run.
