Key points:

• AMD shares rise 5%
• Stock gets an upgrade
• 34% upside move implied

Raymond James says CPUs could become AI’s next major growth engine. Nvidia’s earnings now get to test that optimism almost immediately.

🚀 AMD receives a serious upgrade

• AMD shares AMD jumped 4.9% Tuesday to $479.18 after Raymond James upgraded the chipmaker from Outperform to Strong Buy.
• Analyst Simon Leopold lifted his price target from $565 to $641, implying nearly 34% upside from Tuesday’s close. Subtle, this call was not.
• The bullish case centers on server CPUs — the general-purpose processors that coordinate data-center workloads. Raymond James expects the market to grow at a 44% compound annual rate to roughly $201 billion by 2030, with around $168 billion connected directly to artificial intelligence.
• Agentic AI could provide the next demand wave. These systems don’t merely answer questions; they independently plan and complete multi-step tasks.
• GPUs perform the heavy calculations, but CPUs organize workflows, manage data and keep the expensive accelerators productively occupied instead of admiring one another.

🖥️ CPUs enter the AI spotlight

• Raymond James believes AMD offers the strongest combination of earnings exposure, data-center positioning and market-share gains. The firm expects AMD to overtake Intel in server CPUs by 2027.
• Investors usually frame AMD as a discounted challenger to Nvidia’s AI accelerators. The upgrade argues that AMD doesn’t need to defeat Nvidia in GPUs to win. It can collect revenue from the CPUs sitting beside those accelerators in increasingly complex AI systems.
• AMD has already gained roughly 120% this year, although it remains about 18% below June’s record near $584.73. Your definition of “cheap” may therefore need some flexibility: the growth opportunity is substantial, but the stock already trades at more than 120 times trailing earnings.

👀 Nvidia gets the next word

• Nvidia reports after Wednesday’s close, with analysts expecting second-quarter revenue of approximately $92.2 billion and third-quarter guidance near $104.2 billion.
• Strong data-center demand would support AMD’s broader AI thesis, even if Nvidia continues collecting most of the accelerator money for itself.
• A weak Nvidia outlook could drag the entire semiconductor group lower regardless of AMD’s CPU opportunity. Excellent company-specific news still has to survive the sector’s earnings gravitational field.

Source: Tradingview