One thing simply shifted within the semiconductor market. And one analyst who had been sitting on the sidelines on AMD simply made probably the most aggressive calls on the inventory this yr.
The set off was not AMD’s personal earnings. It was a rival’s. And what that rival revealed in regards to the CPU market modifications the AMD story in methods traders haven’t absolutely priced in but.
What DA Davidson did
DA Davidson analyst Gil Luria upgraded AMD to Purchase from Impartial and raised his value goal to $375 from $220, a 70% enhance within the goal in a single transfer. The brand new goal relies on 32 occasions calendar yr 2027 earnings per share, based on the analyst notice reviewed by TheStreet.
Extra Wall Avenue
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Luria additionally raised his 2026 income estimate for AMD by $2 billion and his gross revenue estimate by $1.5 billion, placing each materially above Wall Avenue consensus and AMD’s personal steering. That isn’t a sentiment improve. It’s a elementary reset of the earnings mannequin.
AMD is because of report Q1 2026 outcomes on Might 5 after market shut. Analysts mission income of roughly $9.84 billion for the quarter, implying roughly 32% year-over-year progress, based on 24/7 Wall St.
Intel’s quarter additionally revealed one thing about AMD
The catalyst behind Luria’s improve is Intel’s Q1 2026 earnings report. Intel posted income of $13.6 billion, a full $1.4 billion above the midpoint of its personal steering, pushed virtually fully by an explosive surge in server CPU demand, based on Intel’s Q1 press launch.
Intel CEO Lip-Bu Tan was direct about what’s driving it. “The CPU is reinserting itself as the indispensable foundation of the AI era,” he mentioned on the earnings name. “This isn’t just our wishful thinking, it’s what we hear from our customers,” based on the Motley Idiot transcript.
The reason being structural. AI workloads are evolving. The pretraining section that drove large GPU demand is giving method to inference, agentic AI, and multi-agent workloads. These workloads require a basically totally different compute combine. As Intel CFO David Zinsner defined on the decision, the GPU-to-CPU ratio is shifting from roughly 8:1 for pretraining to probably approaching parity for agentic workloads, Motley Idiot famous.
That shift has monumental implications for AMD. If CPUs have gotten central to the AI period once more, AMD’s server CPU enterprise is positioned to seize a big share of a market that was not anticipated to develop this quick.
AMD’s Q1 2026 earnings report is now probably the most anticipated prints within the semiconductor sector
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Why Luria thinks the upside belongs to AMD
Luria’s logic is easy. If Intel, with its dominant server CPU market share, beat estimates by $1.4 billion in a single quarter on CPU energy alone, AMD can do the identical. “Even though AMD has lower CPU share, if Intel can add about $2.5 billion a year of revenue and gross profit based on the tightness in CPUs, we are comfortable with those levels for AMD,” he wrote within the notice.
He additionally flagged AMD’s pricing energy. With demand anticipated to outpace provide for the foreseeable future, AMD is “favorably positioned to significantly raise prices across the portfolio to support and expand margins,” Luria famous. That may be a significant improvement for a corporation whose margin profile has been some extent of investor skepticism.
Past CPUs, Luria acknowledged a previous mistake. “We regret not underwriting AMD’s participation in the GPU buildout upon initiation,” he wrote. He now sees AMD’s long-term steering, together with its 35% income CAGR goal, as “much more achievable than it was just a few weeks ago,” with Meta’s 6 gigawatt AI infrastructure dedication and OpenAI’s $122 billion fundraise tipping the dimensions in AMD’s favor.
Key figures behind DA Davidson’s AMD improve:
- New value goal: $375, upgraded from $220, based mostly on 32x CY27 EPS.
- Ranking change: Purchase from Impartial, analyst Gil Luria, DA Davidson.
- 2026 income estimate raised by $2 billion, gross revenue estimate raised by $1.5 billion, now above steering and consensus.
- AMD Q1 2026 earnings scheduled for Might 5 after market shut, based on AMD Investor Relations.
- Analyst consensus value goal on AMD: $289-$290, per 24/7 Wall St., making DA Davidson’s name among the many most bullish on the Avenue.
- Intel Q1 2026 income: $13.6 billion, $1.4 billion above steering midpoint, based on Intel’s press launch.
- GPU-to-CPU ratio shifting from 8:1 for pretraining towards close to parity for agentic workloads, per the Intel earnings name.
- AMD’s 35% income CAGR goal now considered as extra achievable, Luria famous, citing Meta’s 6GW AI dedication and OpenAI’s $122 billion fundraise.
The place DA Davidson stands versus the remainder of Wall Avenue
DA Davidson’s $375 goal stands effectively above the Avenue consensus. The typical value goal amongst roughly 40 analysts overlaying AMD sits round $289 to $290, with 29 issuing Purchase suggestions and 0 Promote rankings, based on 24/7 Wall St. Even probably the most bullish pre-upgrade targets from corporations like Wells Fargo topped out at $345.
That hole issues. It means Luria isn’t just transferring with consensus. He’s making a differentiated name based mostly on a particular thesis: that Intel’s Q1 outcomes are a number one indicator for AMD’s CPU enterprise, and that the Avenue has not but caught as much as what meaning for AMD’s 2026 and 2027 earnings energy.
What traders ought to watch heading into Might 5
AMD’s Q1 2026 earnings report is now probably the most anticipated prints within the semiconductor sector. The corporate guided for income of roughly $9.8 billion, implying 32% year-over-year progress, with a non-GAAP gross margin of round 55%, based on TipRanks.
DA Davidson expects AMD to beat these numbers. If the CPU demand surge that propelled Intel’s quarter is as structural as Luria believes, AMD’s server CPU income might shock meaningfully to the upside. Commentary on pricing, provide tightness, and agentic workload demand would be the key alerts to observe on the decision.
The GPU aspect of the story additionally stays essential. AMD’s long-term knowledge middle AI income targets depend upon continued GPU traction alongside the CPU restoration. If each companies are accelerating concurrently, the case for a re-rating towards DA Davidson’s $375 goal turns into considerably tougher to argue in opposition to.
Associated: Stifel resets AMD value goal for remainder of 2026
