Oppenheimer Upgrades AMD to Outperform, Forecasting 135% Data Centre Growth Next Year

The target is about 34% above AMD's Friday close of $449.04, according to CoinCentral. The shares rose in premarket trading on Monday, with reports at different points before the open putting the gain at between 1.4% and more than 3%. The move puts AMD on the opposite side of the trade from Nvidia, whose shares have fallen as its board investigates chief executive Jensen Huang, but Schafer's argument rests on AMD's own customer pipeline.

Schafer forecasts that AMD's data centre revenue will grow 135% in 2027 and make up 85% of total sales. His model assumes about 3 gigawatts of AMD deployments in 2027 and 4 gigawatts in 2028. He expects OpenAI and Meta to drive growth through the first quarter, with Anthropic ramping late in that quarter, and points to spending by Oracle, Microsoft and Saudi Arabia's Humain. He expects the five largest cloud providers to spend about $1.3 trillion on capital expenditure in 2027, up from $800 billion this year.

He also expects sales of data centre GPUs to overtake revenue from AMD's EPYC server processors, even as he projects the CPU line to more than double next year. AMD has committed to an annual chip cadence, with the MI500 due in 2027 and the MI600 in 2028.

The upgrade follows a volatile week for the stock. AMD reported third-quarter revenue of $13.4 billion on November 3, up 45% from a year earlier, with data centre revenue nearly doubling to $8.5 billion, and guided to about $17 billion for the fourth quarter. Chief executive Lisa Su said, "We do have more demand than we have supply." The shares then fell 17.3% on Thursday in a broad selloff in chip stocks before recovering about 11% on Friday.

Oppenheimer's target puts it alongside or below several peers. DA Davidson rates AMD a Buy with a $600 target, TD Cowen a Buy at $675 and StoneX has a $685 target, while HSBC, at Hold, and RBC, at Sector Perform, both have $540 targets.