Advanced Micro Devices (NASDAQ:AMD) shares gained 2.5% in pre-market trading after Raymond James upgraded the semiconductor company from Outperform to Strong Buy and lifted its price target to $641 from $565.
The broker pointed to what it considers an attractive valuation and a compelling long-term growth opportunity, particularly in the market for server CPUs supporting artificial intelligence workloads.
Raymond James Sees Major AI Server CPU Opportunity
Raymond James expects the AI server CPU market to expand at a five-year compound annual growth rate of 44%, potentially reaching approximately $201 billion in revenue by 2030.
The firm expects several trends to underpin that expansion, including continued data centre investment, increasing use of CPUs to coordinate AI accelerators and the emergence of agentic computing workloads requiring greater processing capacity.
These developments could provide a significant long-term opportunity for AMD as the company expands its presence across AI infrastructure and data centre computing.
The new $641 Raymond James price target represents a substantial increase from the previous $565 target and suggests the broker sees further upside despite AMD’s strong recovery over the past year.
Nvidia Earnings Put Semiconductor Sector in Focus
Positive sentiment towards AMD is also being supported by strength across the semiconductor sector ahead of Nvidia’s second-quarter fiscal 2027 results, scheduled for release after the market closes on August 26.
Investors are expected to scrutinise Nvidia’s figures for evidence that spending on AI infrastructure remains strong. The company’s results are widely regarded as an important indicator of demand across the broader artificial intelligence hardware market.
A robust Nvidia report could therefore reinforce confidence in AMD’s own AI ambitions, particularly as the two companies compete for a greater share of rapidly expanding data centre and accelerator-related spending.
Broader U.S. Market Provides Supportive Backdrop
U.S. equities were also trading higher ahead of the opening bell, creating a favourable environment for technology and other growth stocks.
The S&P 500 gained 0.4%, the Dow Jones advanced 0.4% and the Nasdaq climbed 0.8%, reflecting broader risk appetite across the market.
AMD’s 52-week trading range of $149.22 to $584.73 highlights the substantial recovery in the shares from their previous lows. Raymond James’ new $641 target would take the stock beyond the upper end of that range.
The combination of the Strong Buy upgrade, optimism surrounding continued AI investment and a positive wider market helped push Advanced Micro Devices (NASDAQ:AMD) shares higher in pre-market trading.