Morgan Stanley drops massive AMD stock price target after earnings

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You cognize that feeling erstwhile you've been backing a friend's thought for months, and past abruptly the full country starts paying attention? That's astir wherever Morgan Stanley finds itself with Advanced Micro Devices (AMD).

For the amended portion of six months, the steadfast had been softly bullish connected AMD's server CPU trajectory. The timing, arsenic the analysts themselves admitted successful a enactment shared with TheStreet, was "badly off." They called it their condemnation prime 3 months ago, got the bully CPU 4th they expected, and watched the banal merchantability disconnected anyway.

Then came Q1 2026. And AMD CEO Lisa Su spoke bluntly.

"We are seeing beardown momentum arsenic inferencing and agentic AI thrust expanding request for high-performance CPUs and accelerators," she said during the net commentary.

Now Morgan Stanley is raising its terms target, and explaining wherefore the CPU communicative whitethorn person much country to tally than the marketplace has priced in.

Morgan Stanley raises AMD terms people to $410 from $360

Morgan Stanley kept its equal-weight standing connected AMD but raised its terms people to $410 from $360, according to the enactment shared with TheStreet.

Here is the math. The analysts lifted their valuation aggregate from astir 32 times to 37 times CY27 non-GAAP EPS estimates, citing aggregate enlargement crossed the adjacent group, including Intel, and a stronger multiyear CPU outlook. Their CY27 EPS estimation present sits astatine $11.10.

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For the afloat year, Morgan Stanley forecasts AMD gross of $48.807 cardinal and EPS of $7.22, according to the note.

The steadfast sees the CPU communicative arsenic credible and gaining momentum. On AI and GPU, it remains watchful and wants to spot the rack-scale motorboat present earlier changing that view. AMD banal was up successful after-hours trading pursuing the net release.

AMD's Q1 bushed and wherefore the numbers don't archer the full communicative

AMD posted Q1 2026 gross of $10.3 billion, up 37.8% twelvemonth implicit year, according to a institution statement. Non-GAAP net per stock (EPS) came successful astatine $1.37, up of Wall Street's statement estimation of $1.28, according to a enactment shared with TheStreet.

The bushed was broad-based, but the existent communicative wasn't conscionable what AMD delivered. It was what absorption said next.

AMD Segment results, according to the Morgan Stanley note:

Data Center: $5.775 billion, up 57.2% twelvemonth implicit year
Client (PCs): $2.885 billion, up 25.8% YoY
Gaming: $720 million, down 14.6% quarter-over-quarter (QoQ) and up 11.3 YoY
Embedded: $873 million, up 6.1% YoY
Source: Morgan Stanley Note Shared With TheStreet