BMO Capital has initiated coverage of Advanced Micro Devices with an Outperform rating and a $550 price target, citing the chipmaker's transformation from a processor company into a broad AI infrastructure provider. Analyst Harsh Kumar pointed to Helios, AMD's rack-scale AI platform, as a direct rival to Nvidia's systems, with shipments expected to begin in September and ramp through the fourth quarter and first half of 2027.
Helios combines AMD's Instinct accelerators, EPYC processors, Pensando networking and ROCm software into an integrated rack-scale offering. AMD has already secured committed customers: Anthropic plans up to 2 gigawatts of MI450-series deployments, while OpenAI and Meta each have agreements covering up to 6 gigawatts. Microsoft also plans large-scale Helios deployments on Azure, and Oracle is listed as another customer deploying the infrastructure.
The bullish sentiment was supported by AMD's second-quarter results, with revenue of $11.54 billion, up 50.1% year over year, and earnings of $1.66 per share, beating the consensus estimate of $1.62. Analysts now forecast full-year earnings of $6.44 per share. Several firms raised targets: Benchmark lifted its target to $685 from $485; Roth MKM raised to $650 from $500; Jefferies moved to $650; and BMO's $550 target sits near the consensus Wall Street target of $546.95. Wells Fargo analyst Aaron Rakers cited confidence in above-consensus data-center GPU revenue of $40.6 billion for 2027, while RBC increased AI-GPU sales estimates by $10 billion for both 2027 and 2028.
Still, the stock closed Monday at $456.75, down 3.5%, reflecting investor caution. Risks include a P/E ratio above 120, Nvidia's dominant position, SpaceX choosing Nvidia's Vera Rubin platform, and Google's expanding custom chip efforts. Insider selling also occurred under pre-arranged plans: CEO Lisa Su sold 125,000 shares in June at an average price of $460.69, and SVP Ava Hahn sold roughly 2,993 shares on Aug. 18 at $488.69 per share. Institutional investors remain engaged, with Tocqueville Asset Management raising its AMD stake by 501.5% in the second quarter and 71.34% of the stock held by institutions and hedge funds.
