Melius Upgrades AMD to Buy, Sees Major Upside as AI Demand Builds
Summary
Melius Research upgraded AMD to Buy from Hold, raising its price target to $175 from $110. The upgrade is driven by accelerating AI inferencing demand, particularly from hyperscalers and sovereign entities, and improving visibility into AMD's GPU roadmap. Melius anticipates AMD's earnings per share could exceed $8 within two years due to the expanding AI opportunity, viewing the recent stock pullback as a buying opportunity for long-term investors.
Melius Upgrades AMD to Buy, Citing Major AI-Driven Upside
Publication Date: June 23, 2025
Melius Research has significantly upgraded Advanced Micro Devices (NASDAQ: AMD) from Hold to Buy, concurrently raising its price target to $175 from $110. This substantial revision reflects a perceived shift in investor sentiment and strengthening fundamental drivers, positioning AMD for what Melius believes is the next phase of a sustained upward trajectory.
The upgrade comes despite AMD's recent share price volatility, which saw the stock rally from $135 to $211 in 2024 before experiencing a notable decline to $78 in 2025. Melius analysts contend that the current market dynamics and AMD's strategic positioning indicate a renewed period of growth.
Accelerating AI Momentum as a Key Catalyst
A primary driver behind Melius's optimistic outlook is the accelerating momentum in AI inferencing. The firm highlights increasing interest from both hyperscale cloud providers and sovereign entities in AMD's platform. This growing adoption positions AMD as a viable and compelling alternative for high-performance computing solutions, directly challenging established players in the burgeoning AI hardware market.
Improving Visibility and Earnings Projections
Melius anticipates a series of upward revisions to AMD's financial estimates through 2028. This improved visibility is attributed to a clearer understanding of AMD's GPU roadmap and broader platform adoption across various sectors. The research firm now projects that AMD's earnings power could exceed $8 per share within the next two years, a forecast largely underpinned by the expanding opportunities within the artificial intelligence sector.
Strategic Buying Opportunity for Long-Term Investors
Despite acknowledging that AMD may have missed the initial rebound phase, Melius believes there remains significant upside potential. The recent pullback in AMD's stock price is viewed by the firm as a strategic buying opportunity for long-term investors looking to capitalize on the company's anticipated growth in the AI landscape.
This upgrade underscores a growing conviction among some analysts regarding AMD's ability to capture a larger share of the high-growth AI market, leveraging its technological advancements and strategic partnerships.