Advanced Micro Devices (NASDAQ: AMD) has already delivered one of the strongest stock performances in the semiconductor sector this year, but Wall Street believes the rally may not be over. In fact, analysts at UBS recently reaffirmed their Buy rating on the chipmaker and raised their price target to $730 from $700.
The increase follows AMD’s latest AI investor event, where the company outlined its roadmap for its processors and presented a much larger view of the artificial intelligence market than it had previously forecast.
UBS said the firm’s higher target reflects growing confidence in Advanced Micro Devices’ long-term earnings potential. The bank now believes the company could generate earnings per share approaching $30 by calendar year 2028, driven by continued gains in the data center market and expanding demand for AI hardware.
UBS Sees More Upside Ahead
Much of the optimism stems from AMD’s “Advancing AI 2026” event. During the presentation, executives laid out an aggressive vision for the company’s role in powering the next generation of artificial intelligence.
One of the biggest announcements was Advanced Micro Devices’ updated forecast for the AI accelerator market. The company now estimates the market could reach approximately $1.4 trillion by 2030, nearly three times larger than its previous estimate of $500 billion by the end of 2028.
The revised outlook reflects the rapid adoption of AI across industries, from cloud computing and software development to healthcare, finance, and manufacturing. As businesses invest heavily in training and deploying increasingly sophisticated AI models, demand for high-performance computing hardware continues to climb.
AMD also said it expects graphics processing units, or GPUs, to represent the overwhelming majority of that opportunity. GPUs have become the workhorses of modern AI because they can process massive amounts of data simultaneously, making them well suited for training and running large language models and other advanced AI applications.
AI Demand Continues to Drive the Stock
Shares have surged about 55% over the past three months alone as investors have grown bullish about the company’s position in the expanding AI ecosystem.
While Nvidia remains the dominant force in AI accelerators, AMD has steadily established itself as a credible alternative, particularly among large cloud providers seeking greater supplier diversity and competitive pricing.
CPUs Give AMD Another Catalyst
Advanced Micro Devices’ opportunity extends beyond AI accelerators.
The company is already a major supplier of central processing units (CPUs) used in data centers, where it has steadily gained ground against competitors. Industry estimates suggest AMD now controls nearly half of the data center CPU market, a remarkable turnaround considering its relatively small presence just a few years ago.
Its EPYC server processors have been widely adopted because they offer strong performance and energy efficiency—two increasingly important factors for cloud providers operating massive computing infrastructure.
Big Tech Partnerships Strengthen the Outlook
The company has secured business with some of the world’s largest technology companies, including Microsoft Azure and Meta Platforms, both of which continue investing billions of dollars in AI infrastructure.
AMD has also strengthened its relationship with OpenAI, one of the leading developers of generative AI models. As AI developers seek additional computing capacity beyond existing suppliers, Advanced Micro Devices has emerged as an increasingly important partner.
Should Investors Pay Attention to AMD?
AMD’s combination of a growing CPU market, expanding GPU portfolio, and strong relationships with hyperscale customers has strengthened the company’s competitive position.
For UBS, those factors support the view that AMD’s earnings power could continue rising over the next several years. If the AI market develops anywhere close to the scale the company now projects, analysts believe AMD could be one of the biggest beneficiaries of the industry’s next phase of growth. After a powerful rally, the stock is no longer inexpensive.
But for investors who believe artificial intelligence will continue reshaping the technology landscape, UBS argues Advanced Micro Devices’ growth story may still have considerable room to run.
