-- Advanced Micro Devices (AMD) reported solid results and an upbeat outlook but further outperformance will depend on GPU ramp execution, while competition and execution risks remain longer term, RBC Capital Markets said in a Wednesday research note.
The company posted higher year-over-year Q1 adjusted earnings of $1.37 per diluted share from $0.96. Revenue increased to $10.25 billion from $7.44 billion. Advanced Micro Devices issued Q2 revenue guidance of $11.2 billion, plus or minus $300 million.
Advanced Micro Devices' server central processing unit, or CPU, segment outperformed in Q1. It grew more than 50% year on year supported by agentic artificial intelligence. AI graphics processing unit, or GPU, also posted a substantial double-digit growth on an annual basis, the investment firm added.
The company could face risks from intensifying competition with ARM (ARM) in the server CPU market. RBC said further outperformance would depend largely on ramps of MI455/Helios, with limited near-term catalysts until the MI GPU cycle scales.
RBC raised its price target on AMD to $400 from $325, with a sector perform rating.
Shares of Advanced Micro Devices were up more than 16% in Wednesday afternoon trading.
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