Top Analyst strongly resets AMD stock price target

Wall Street just picked a new favorite in the AI chip race, and it isn't the company most investors expect.

According to Investing.com, Cantor Fitzgerald analyst C.J. Muse raised his price target on Advanced Micro Devices (AMD) to $700 from $500 on June 29, keeping his Overweight rating. 

That makes it the highest AMD price target on Wall Street. Cantor now calls this stock its top pick in the computing sector, ranking it above both Nvidia(NVDA) and Broadcom (AVGO).

The timing stands out. AMD shares closed at a record $580.91 on June 30, capping a year-to-date gain of more than 150%. 

The very next session, the stock fell nearly 7% after reports surfaced that Meta Platforms (META) may start reselling its excess AI computing capacity.

Muse's new target still implies a more than 34% increase from where the stock traded this week.

Given that Muse is a TipRanks 5-star rated analyst, ranking #7 out of 12,346 Wall Street analysts, you might want to consider what he has to say. Here's the case Cantor is making, and why the rest of Wall Street hasn't fully caught up to it yet.

Cantor's $700 call puts AMD ahead of Nvidia and Broadcom

Muse said AMD now offers the strongest momentum in the computing market among semiconductor companies, Investing.com reported. 

On the other hand, Muse highlighted that Qualcomm's (QCOM) recent chip push is likely to fade back into a smartphone story. 

However, the analyst still views Nvidia and Broadcom as inexpensive despite recent swings. 

Gurufocus also confirmed that AMD's Overweight rating stayed intact under the higher target.

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Muse isn't alone in the upgrade cycle. According to Parameter, UBS analyst Timothy Arcuri set a $670 target the same week, and Wells Fargo's Aaron Rakers raised his to $615. 

Wells Fargo pointed to the chipmaker's under-the-radar server CPU business rather than its GPU lineup as the reason behind its outlook. 

Each outlook tells the same story from a different angle, with server processors and AI accelerators both feeding the same data-center boom.

Yuichiro Chino &sol Getty Images

AMD's data center growth gives Cantor's number some backing

According to AMD, the company's first-quarter revenue climbed to $10.3 billion, with gross margin at 53% and diluted earnings per share of 84 cents. 

Data center sales also jumped 57% to $5.8 billion, which is now more than half of total revenue.

AMD CEO Dr. Lisa Su said the company is seeing strong demand for its high-performance chips, driven by growing use of AI inferencing and autonomous AI agents.

Two developments support this. First, AMD's newest server chips, the sixth-generation EPYC Venice line, began ramping up production in May. 

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More customers are testing this generation of server chips than any previous EPYC launch, the company said.

AMD also signed a definitive agreement with Rackspace Technology on June 16 to supply 30 megawatts of AI computing power. The rollout will continue in phases through 2028, Quiver noted.

Why the average AMD price target still trails Cantor's number

Not everyone is on board yet. 

Wall Street's average price target for AMD sits at $509.75, which is well below both Cantor's call and the stock's recent trading range. 

Price targets across the 35 analysts covering the stock still range from $250 to $700. That's one of the widest spreads among major chipmakers.

A stock trading near 70 times projected earnings gives skeptics plenty of ammunition. Meta's potential move into reselling excess AI computing capacity also adds to the uncertainty. 

D.A. Davidson analyst Gil Luria kept his Buy rating anyway, arguing the demand for AI computing still exceeds supply despite the recent noise.

What has to go right for AMD to reach $700:

• Data center revenue keeps growing above 50% as Venice server chips scale through 2026 and 2027
• The Rackspace deal and similar hyperscaler agreements deploy on schedule without delays
• AI chip demand holds up even if Meta or other cloud giants start reselling spare capacity
• The average Wall Street target starts closing the gap with Cantor's outlier call

For now, Cantor Fitzgerald is the most bullish voice on Wall Street, betting that AMD's computing momentum still has room to run. 

Whether the rest of Wall Street catches up may come down to how the server CPU business performs when AMD reports second-quarter results in early August.

Related: 5-star analyst resets AMD stock price target, but it's not about GPUs