Wall Street’s favorite AI swing lately has been Advanced Micro Devices (AMD).
The chip giant continues stacking proof points, including a swifter GPU road map, a louder cloud chorus, and a headline-grabbing tie-up with OpenAI.
That partnership didn’t come cheap, though, with AMD parting with nearly 10% of its equity to lock it in. It did, however, bring a ton of relevance at the center of the AI arms race and a bigger claim on future training and inference budgets.
Consequently, the stock has sprinted more than 30% in the last quarter, almost doubling in 2025 and reinforcing the belief that AMD may close the gap in AI accelerators while EPYC steadies the server base.
Additionally, with tech giant Oracle lining up 50,000 AMD GPUs, the demand picture looks a lot more scheduled.
That’s exactly why the latest Bernstein note from 5-star analyst Stacy Rasgon is so pertinent. The note is short, sharp, and surgical, outlining what must go right to reshape how investors handicap AMD’s next act.
Bernstein’s Stacy Rasgon issued a sharp note on AMD’s outlook ahead of its Nov. 4 earnings report, calling attention to rising expectations in the AI race.
Cheng/AFP via Getty Images
Bernstein’s Stacy Rasgon: AMD AI gains strong, yet earnings expectations too high
Bernstein’s Stacy Rasgon has just updated his outlook on AMD ahead of the tech behemoth’s next earnings report, and the message is clear: The optimism is warranted, but expectations are running high.
He admits that AMD’s partnership with OpenAI was a smart and perhaps even necessary move, while highlighting that AMD gave up about 10% of its equity, which significantly raises the performance bar going forward.
More Tech Stocks:
- Senior analyst lifts Palantir stock price target with a catch
- Nvidia just scored a massive AI win, but CEO Huang has regrets
- Apple’s iPhone 17 story just took an unexpected turn
- Analysts revamp Salesforce stock forecast after key meeting
Rasgon maintained a market perform (equivalent to hold) rating on AMD, keeping his price target at $200 (16% lower than its current price).
Looking ahead, he sees progress in PC and server demand for AMD, but believes the chipmaker is likely to face major hurdles heading into 2026.
Related: Bank of America revamps Google stock price target ahead of earnings
Rasgon now forecasts Q3 sales of $8.94 billion with earnings of $1.22 per share, slightly behind consensus estimates of $8.74 billion and $1.17. For 2026, he’s modeling $39.1 billion in revenue and $5.27 EPS, notably behind Wall Street’s more lofty projections.
Hence, he feels the market’s expectations have outpaced fundamentals. Though AMD’s PC and server segments are improving, Rasgon feels that investors banking on $10 a share by 2027 are “too optimistic.”
AMD’s Q3 report will test AI demand, data-center execution, 2026 visibility
AMD heads into its Q3 2025 earnings report on Nov. 4 with momentum and rising expectations.
It guided Q3 sales to be around the $8.7 billion mark ± $300 million, roughly 28% higher year over year and up 13% from Q2. Moreover, consensus estimates center on $8.7 to $8.8 billion in sales along with a non-GAAP EPS near $1.17, with gross margins of about 54%.
Related: Why Nvidia’s Vera Rubin may unleash another AI wave
Nevertheless, the bar is clearly higher.
AMD’s Q2 report showed steady execution, with sales of $7.69 billion, nearly $256 million above consensus, and normalized EPS of $0.48.
Analysts now model a significant increase for Q3, with $1.17 in normalized EPS and $0.68 in GAAP EPS. Over the last 90 days, 23 estimate revisions have trended higher versus 12 lower, highlighting a growing confidence in AMD’s data-center and PC recovery.
The focus this quarter is likely to fall on data center momentum. Shipments of MI350/355X GPUs and commentary on the 2026 MI450/Helios roadmap will be critical, including the Oracle deal. Progress on GPU pricing, supply availability, and data-center revenue cadence heading into next year will be imperative.
Gross margins will depend on the product mix, with a healthier GPU contribution potentially lifting results. In contrast, China’s export bottlenecks and a potential shift back to a CPU mix remain key points to consider.
Quick takeaways:
- Earnings setup: AMD reports Q3 results on Nov. 4, with Wall Street consensus at $8.7 billion to $8.8 billion in sales and $1.17 EPS, pointing to superb double-digit growth.
- AI focus: The data center business, led by MI350/355X GPUs and Oracle’s massive GPU orders, remains the key swing factor for upside.
- Margin watch: Investors will be tracking gross margin mix (54%) and China export recovery, along with Q4 guidance to gauge momentum into 2026.
Related: Apple’s iPhone 17 story just took an unexpected turn