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Morgan Stanley Lifts $AMD Target to $185 as AI Demand Surges

Key Takeaways

  • Morgan Stanley has raised its price target for AMD to $185 from $121, driven by strong demand for AI accelerators and a resurgent personal computer market.
  • The move reflects a broader positive sentiment from Wall Street, with firms like Susquehanna and Bank of America also lifting their targets to $210 and $200, respectively.
  • AMD’s Instinct GPUs are reportedly gaining significant traction in the AI inference market, with company guidance projecting $4 billion in AI chip sales for 2024.
  • Despite the bullish forecasts, valuation remains a key consideration. Morgan Stanley maintains a more cautious ‘Equal Weight’ rating, even as its target implies notable upside.
  • While the stock’s momentum is strong, investors are weighing the growth narrative against persistent risks, including potential supply chain disruption and geopolitical export controls.

Morgan Stanley’s decision to lift its price target on Advanced Micro Devices to $185 from $121 underscores a sharpening optimism around the chipmaker’s prospects, particularly as it rides the wave of artificial intelligence demand and a resurgent personal computer market.

Decoding the Upgrade Momentum

This adjustment arrives amid a flurry of positive revisions from Wall Street, marking the third such endorsement in under a week. Analysts are recalibrating their views on AMD, driven by signals that its AI accelerators and PC chips are gaining traction in ways that could redefine its earnings trajectory. The hike from $121 to $185 implies a potential upside of roughly 5% from the stock’s current trading level around $176, but it also reflects a broader revaluation: just months ago, that lower target suggested a far more conservative outlook, perhaps undervaluing AMD’s pivot towards high-margin AI products.

What stands out is the context of these upgrades. They follow AMD’s reinstatement of export licences for its MI308 AI accelerator in China, a market that had been a point of uncertainty. This development, combined with early indicators of robust PC demand, has prompted other firms to revise their outlooks. These moves collectively signal a consensus that AMD is not just participating in the AI boom but accelerating through it, potentially outpacing earlier scepticism about its ability to compete with Nvidia.

Analyst Firm Price Target Rating (if mentioned)
Morgan Stanley $185 Equal Weight
Susquehanna $210 N/A
Bank of America $200 N/A
FactSet Consensus ~$154 Buy

AI as the Core Driver

At the heart of this optimism is AMD’s deepening entrenchment in AI. Morgan Stanley’s note highlights “exceptional” strength in AI demand, pointing to the company’s Instinct lineup of GPUs as a key beneficiary. Unlike past cycles where AMD played catch-up, current trends suggest it is carving out a meaningful slice of the inference market—the phase where trained AI models are deployed for real-world use. This is no small feat; inference chips are projected to drive a significant portion of future semiconductor spending, with some forecasts estimating that AI-related revenues could propel AMD’s data centre segment to grow by over 50% annually in the coming years.

To put this in perspective, AMD’s forward price-to-earnings ratio stands at about 34.6, based on expected earnings per share of $5.10. That’s a premium, certainly, but it compares favourably to historical multiples during growth spurts. Back in 2020, when AMD’s stock surged on cloud computing bets, its P/E hovered around 40 before delivering outsized returns. If AI lives up to the hype, this could be a bargain; if not, it serves as a reminder that chip stocks can cool as quickly as they heat up.

PC Recovery Adds Fuel

Beyond AI, the upgrades reflect a rebound in the PC sector, which had been a drag on AMD’s performance amid post-pandemic slumps. Recent data points to a stabilisation, with shipments expected to rise modestly in 2025, per IDC estimates. AMD’s Ryzen processors are well-positioned here, especially with new launches like the Threadripper 9000 series, boasting up to 64 cores for professional workloads. Morgan Stanley specifically nods to this, adjusting its multiple higher on unchanged EPS estimates, implying that visibility into near-term demand has improved markedly.

Live trading data reinforces this narrative. AMD’s shares have climbed 42.85% over the past 200 days, outpacing its 50-day average of $135.36 by a wide margin. Yet a recent dip of about 1.8% to $176.31, on volume exceeding 71 million shares, suggests some profit-taking ahead of the upcoming earnings report on August 5th. Investors are likely weighing the potential for beats against the risk of supply chain hiccups or export restrictions resurfacing. Still, the stock’s proximity to its 52-week high of $182.49 indicates momentum is intact, with the market cap now topping $285 billion—a testament to how far perceptions have shifted since the days when AMD was seen as a perennial underdog.

Sentiment and Broader Market Echoes

Sentiment among professional sources is decidedly bullish, with an average analyst rating of “Buy” and a consensus price target around $154, according to FactSet—though recent upgrades are pulling that figure upward. Morgan Stanley maintains an Equal Weight stance, a cautious counterpoint to more aggressive Overweight calls from peers, perhaps tempering enthusiasm with reminders of valuation risks in a sector prone to volatility. It is darkly amusing how a $185 target feels restrained when others are eyeing $210, yet it still represents a 53% leap from the prior mark.

Looking ahead, AI-modelled forecasts—grounded in historical growth patterns and current order backlogs—suggest AMD could achieve EPS of $3.98 this year, scaling to $5.10 next, if data centre revenues hit the high end of guidance. Company executives have guided for AI chip sales to reach $4 billion in 2024, a figure that could double in 2025 if hyperscalers like Microsoft and Google continue their buildouts. But these are not without caveats; export controls remain a wildcard, as evidenced by recent reviews in China.

Investor Implications

For investors, this cluster of upgrades poses a clear question: is AMD’s revaluation a harbinger of sustained outperformance, or merely a fleeting rally? The rapid succession hints at a tipping point where accumulated evidence of AI wins and PC stabilisation overrides prior doubts. Yet, with the stock’s price-to-book ratio at 4.92 and shares outstanding at 1.62 billion, any earnings miss could trigger a swift correction.

One way to frame it is through backward comparison: in 2023, AMD’s EPS trailed at $0.53 amid inventory gluts, but today’s trailing twelve-month figure of $1.36 shows a company in inflection. This is not just about one bank’s view; it is a collective nod to AMD’s evolution from CPU specialist to AI contender. Prudent portfolios might allocate accordingly, balancing the allure of growth against the sector’s inherent risks. In semiconductors, after all, today’s upgrade can be tomorrow’s downgrade if the cycle turns.

References

  1. Investing.com. (2025, July 31). Morgan Stanley raises AMD stock price target to $185 on AI growth potential. Retrieved from https://www.investing.com/news/analyst-ratings/morgan-stanley-raises-amd-stock-price-target-to-185-on-ai-growth-potential-93CH-4159845
  2. MarketScreener. (2025, July 30). Morgan Stanley Raises Price Target on Advanced Micro Devices to $185 From $121, Keeps Equal-Weight Rating. Retrieved from https://www.marketscreener.com/news/morgan-stanley-raises-price-target-on-advanced-micro-devices-to-185-from-121-keeps-equalweight-ra-ce7c5fdfda8df12d
  3. Investing.com. (2025, July 31). Chip stocks’ targets raised at Morgan Stanley on ‘exceptional’ AI strength. Retrieved from https://investing.com/news/stock-market-news/chip-stocks-targets-raised-at-morgan-stanley-on-exceptional-ai-strength-4159780
  4. Investing.com. (2025, July 31). Susquehanna raises AMD stock price target to $210 on China AI export license review. Retrieved from https://www.investing.com/news/analyst-ratings/susquehanna-raises-amd-stock-price-target-to-210-on-china-ai-export-license-review-93CH-4160008
  5. Moneycheck.com. (2025, July 28). Advanced Micro Devices (AMD) Stock: BofA Raises Price Target to $200 Ahead of Critical Q2 Earnings. Retrieved from https://moneycheck.com/advanced-micro-devices-amd-stock-bofa-raises-price-target-to-200-ahead-of-critical-q2-earnings/
  6. MarketBeat. (2025, July 30). Advanced Micro Devices (NASDAQ:AMD) Price Target Raised to $185.00. Retrieved from https://www.marketbeat.com/instant-alerts/advanced-micro-devices-nasdaqamd-price-target-raised-to-18500-2025-07-30/
  7. The Markets Daily. (2025, July 31). Morgan Stanley Issues Positive Forecast for Advanced Micro Devices (NASDAQ:AMD) Stock Price. Retrieved from https://themarketsdaily.com/2025/07/31/morgan-stanley-issues-positive-forecast-for-advanced-micro-devices-nasdaqamd-stock-price.html
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