Shortly after the May 5 closing bell, Advanced Micro Devices (NASDAQ: AMD) reported its earnings, triggering an 18.10% extended-session rally that sent the stock flying from $355.26 on Tuesday evening to $419.55 on Wednesday morning.
Numerous Wall Street analysts swiftly reacted to strong revenue growth – nearly a 40% increase compared to the first quarter (Q1) of 2025 – and guidance for Q2 that indicates growth for the three-month period would amount to more than 45% relative to the previous year.
A standout feature of most new price targets is that most revisions came in at double-digits.
Goldman Sachs (NYSE: GS) raised its 12-month forecast by more than 87% – from $240 to $450. Bernstein, KeyBanc, and Barclays were all comparably optimistic, raising their targets from $265 to $525 – by 98% – $330 to $530 – 60% – and $300 to $500 – 67% – respectively.
Under the circumstances, D.A. Davidson appeared conservative in keeping the previous forecast of $425, and Truist Financial was only slightly more bullish in maintaining $478.
Simultaneously, Cantor Fitzgerald was seemingly vindicated for its long-standing confidence when it retained $500 as its 12-month forecast: 40.74% above the last close and 19.18% above the press time price.
Is Wall Street capitulating on AMD stock valuation concerns?
Elsewhere, the deluge of major upward revisions – especially when juxtaposed with some reassessments that came shortly before the earnings – appears to indicate Wall Street is abandoning its concerns about valuation.
Indeed, on May 4, HSBC’s Frank Lee downgraded AMD stock to ‘Hold’ while setting the 12-month price target at $340: 4.30% below the latest close and 18.96% under the May 5 pre-market price of $419.55.
The analyst highlighted the anticipated cap on growth in 2026, punctuated by semiconductor foundry capacity limitations.
The measured outlook fell largely in line with the previous, widespread opinion that, while AMD remains a quality company, its stock is unjustifiably expensive, especially when compared to the other blue-chip chipmaker, Nvidia (NASDAQ: NVDA).
Advanced Micro Devices’ trailing price-to-earnings (P/E) ratio stands at 130.86, and forward P/E is at 50.76. Nvidia – simultaneously the world’s largest company by market capitalization – shows readings of 40.51 and 24.45, respectively, for the two metrics.
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