AMD Stock Whipsaws After Earnings. What Wall Street Thinks.

AMD last month announced a long-term deal to become a key supplier to OpenAI’s AI infrastructure buildout. (David Paul Morris/Bloomberg)

Advanced Micro Devices reported better-than-expected financial results, sending its shares on a rollercoaster ride as initial losses were wiped out amid positive verdicts from Wall Street.

The chip maker reported after the bell Tuesday, posting earnings per share of $1.20 for the September quarter, compared with the consensus call for $1.17 among Wall Street analysts surveyed by FactSet. Revenue came in at $9.25 billion, which was ahead of analysts’ expectations for $8.76 billion.

AMD also forecast current-quarter revenue will land in a range with a midpoint of $9.6 billion, compared with the $9.21 billion average analyst estimate.

“Our record third-quarter performance and strong fourth-quarter guidance marks a clear step up in our growth trajectory as our expanding compute franchise and rapidly scaling data center AI business drive significant revenue and earnings growth,” CEO Lisa Su said in a news release.

AMD shares initially fell as much as 5% after the report. The stock had more than doubled this year so far through to Tuesday’s close.

“We believe the company’s stock was well primed for a short-term “sell-the-news’ correction, regardless of what was said in AMD’s strong earnings results,” wrote Benchmark Research analyst Cody Acree in a research note.

Acree raised his target price on AMD stock to $325 from $270, reiterating a Buy rating. He says its artificial-intelligence chips are gaining traction as an alternative to those from the market leader, Nvidia .

Investors looked to be coming round to Acree’s way of thinking in morning trading on Wednesday. AMD stock gained 0.4% to $250.93.

Intel and AMD use the x86 chip architecture in making the central processing units that act as the main computing brains for PCs and servers.

On the earnings call with analysts, Su said many customers are planning “substantially” larger CPU buildouts in the next few quarters to support higher AI demand. She also said AMD’s AI business is on track to grow to tens of billions of dollars in annual revenue by 2027.

Last month, AMD also announced a long-term deal to become a key supplier for OpenAI’s buildout of infrastructure for AI. The agreement entails OpenAI deploying six gigawatts of AMD graphics processing units, starting with one gigawatt of rack-scale MI450 GPU servers in the second half of 2026.

OpenAI is a leader in AI technology with products such as ChatGPT, AI models for enterprises, and the recently released social video app Sora.

Multiple Wall Street commentators pointed toward an event for analysts AMD has scheduled on Tuesday as a factor that could help AMD shares to move higher.

“Recent announcements with OpenAI and OCI [Oracle Cloud Infrastructure] provide longer-term growth visibility, and we believe that additional engagements could drive further upside in an AI infrastructure total addressable market that continues to expand,” wrote Stifel analyst Ruben Roy in a research note. “We expect the company to provide more detail on its technology roadmap, customer traction and market sizing at the 2025 Analyst/Investor Day next week.”

Roy raised his target price on AMD stock to $280 from $240, with a Buy rating.

Write to Tae Kim at tae.kim@barrons.com and Adam Clark at adam.clark@barrons.com