TLDR
- AMD reported earnings of $1.20 per share and revenue of $9.25 billion, beating analyst expectations on both metrics
- Revenue jumped 36% year-over-year while net income rose to $1.24 billion from $771 million
- Q4 revenue guidance of $9.6 billion exceeded Wall Street’s $9.15 billion forecast
- Stock fell 5% as investors worried about AI infrastructure spending across the tech sector
- UBS raised price target to $300, citing upcoming analyst day and long-term earnings potential
AMD delivered strong third-quarter results Tuesday. The stock still dropped nearly 5% in pre-market trading Wednesday.
The chipmaker posted adjusted earnings of $1.20 per share. Wall Street had expected $1.16.
Revenue reached $9.25 billion. That beat the $8.74 billion consensus estimate.
Year-over-year revenue growth hit 36%. Net income climbed to $1.24 billion from $771 million in the prior year.
Despite these wins, investors weren’t impressed. The broader AI sector faced pressure as concerns mounted about spending returns.
Strong Guidance Can’t Save the Day
AMD’s fourth-quarter outlook also exceeded expectations. The company projects revenue of approximately $9.6 billion.
This represents 25% growth. Analysts had forecast $9.15 billion.
Margins came in at expected levels. They didn’t surpass estimates, which may have contributed to the tepid response.
The real problem wasn’t AMD’s numbers. Market sentiment toward AI stocks has shifted.
Tech giants have poured billions into AI infrastructure. Investors are now questioning whether these investments will generate sustainable returns.
The S&P 500 and Nasdaq both declined Tuesday. AI-related stocks bore the brunt of selling pressure.
Analysts Maintain Bullish Outlook
UBS increased its AMD price target to $300 from $265. The firm kept its Buy rating intact.
The new target suggests upside from current levels around $250. UBS warned against selling before AMD’s analyst day.
This marks the company’s first analyst day since ChatGPT’s launch. The event could provide clarity on future growth plans.
UBS anticipates AMD will present a roadmap to $15-20 in earnings per share later this decade. Current earnings stand well below that level.
Some AI GPU sales appeared to move from Q4 into Q3. This may have involved Oracle, according to UBS.
AMD addressed potential slowdown concerns in its AI GPU business. The company expects GPU sales to weight toward the second half of 2026.
Traditional server infrastructure is seeing strong refresh cycles driven by agentic AI. UBS estimates this segment could account for over 35% of AMD’s earnings per share in 2026.
The firm believes AMD will benefit as Intel struggles with its product roadmap. Intel currently faces challenges in the space.
Loop Capital raised its AMD target to $290. Piper Sandler increased its target to $280, highlighting strong data center performance that grew 22% year-over-year.
Roth/MKM and Baird both set targets at $300. Jefferies maintained its $300 target, emphasizing server CPU growth driven by AI demand.
The analyst community remains optimistic about AMD’s trajectory. Market sentiment just needs time to catch up.
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