Key Takeaways
- Goldman Sachs trimmed its AMD price target to $675 from $700 and kept its Buy rating, a target 40% above Tuesday’s close.
- AMD shares are 28% below their October high after worries over AI spending and Intel’s weak PC guidance, even as AMD now expects revenue to grow more than 80% in 2027.
- Goldman’s target works out to 60x the earnings analysts expect over the next twelve months, near AMD’s June peak and well above its 5-year average of 35x.
- The target looks reachable in a year if AMD earns what analysts expect for 2027, though that depends on a few AI labs getting their data centers running on time.
Goldman Sachs trimmed its price target on Advanced Micro Devices (AMD) to $675 from $700 on Wednesday and kept its Buy rating, after AMD’s record third quarter. That’s 40% above Tuesday’s close of $483.90, with the stock 28% below its Oct. 6 closing high.
A rough October for AI chips
AMD’s slide began in mid-October, when a selloff in CoreWeave’s bonds and questions about OpenAI’s revenue revived worries about who pays for the AI build-out.
Then Intel (INTC) guided fourth-quarter revenue to $15.0 billion to $16.0 billion, with client revenue down more than 20% from the third quarter. AMD lost 11% on Oct. 30 on Intel’s PC warning.
Goldman still likes it best
AMD’s third-quarter revenue rose 45% year over year to $13.4 billion, and Data Center revenue nearly doubled to $8.5 billion. AMD guided fourth-quarter revenue to about $17 billion, above the roughly $16.2 billion that analysts’ full-year forecasts implied going in.
On the call, CEO Lisa Su went further: “we now expect revenue to grow more than 80% in 2027.”
Goldman’s James Schneider expects the stock “to trade higher following stronger results and guidance which we believe supports our bullish revenue growth outlook for AMD through 2027,” and called AMD “our favorite idea in the group.” Goldman cut its target because of valuation.
TIKR tracks 53 analysts on AMD. How many say “Buy”?
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Does $675 add up?
Fifty-five analysts cover AMD, with targets from $430 to $1,250. Their consensus target has more than doubled over the past year, to $647 on Nov. 2 from $247:
Analysts expect the earnings behind those targets to more than double next year:
AMD’s 80%-plus guide beats the $89.2 billion of 2027 revenue that consensus had in October, so I’d expect these pre-report estimates to move up.
AMD traded at 42x forward earnings at the Nov. 2 close. That’s above its 5-year average of 35x and well below June’s peak of 67x:
Goldman’s $675 works out to 60x the $11.18 a share analysts expect over the next twelve months, close to that peak. But a year from now, the next twelve months will be mostly 2027 and 2028, when analysts expect EPS of $16.01 and $23.03. On those earnings, it would take a far lower multiple to reach $675.
Within reach, if the labs deliver
Winning AI labs as customers has come at a cost. AMD granted OpenAI and Meta warrants for up to 320 million shares at a penny each, 19.6% of its shares outstanding in late July. CFO Jean Hu said the noncash charges tied to them, $1.1 billion last quarter, are “expected to increase as we and our customers progress under this agreement.”
Here’s where I land: Goldman’s $675 looks reachable in a year. If AMD earns what analysts expect for 2027, and Tuesday’s guidance makes that likelier, the stock can get there without a peak multiple.
That depends on a few AI labs getting their data centers running on time. The next check is the fourth-quarter report in early February, the first with Helios racks shipping in volume.
So what is AMD stock actually worth?
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