According to Zhitong Finance APP, Morgan Stanley released a recent research report noting that AMD (AMD.US) successfully offset weakness in the PC market due to strong performance in its data center business, particularly better-than-expected upward revisions in its server CPU segment. Morgan Stanley raised its fiscal year 2027 revenue forecast for AMD from $89.13 billion to $98.94 billion, non-GAAP
Earnings per share (EPS) expectations were raised from $15.64 to $18.77, and the target price was increased from $510 to $550; however, given that the valuation is already higher than peers such as NVIDIA and Broadcom, the firm maintained its "Market Perform" rating.
Financial results show that AMD's third-quarter revenue reached $13.377 billion, a 44.7% year-over-year increase and a 16% sequential increase, surpassing the market expectation of $13.096 billion; non-GAAP EPS was $2.09, exceeding the market expectation of $1.95; non-GAAP gross margin was 55.9%, in line with expectations. By segment, data center revenue was $8.546 billion, up sharply 96.9% year-over-year and 27.2% sequentially; client revenue was $2.949 billion, up 7.2% year-over-year; gaming revenue was $773 million, down 40.4% year-over-year; embedded revenue was $1.109 billion, up 29.4% year-over-year.
Most notably, the growth outlook for server CPUs. Morgan Stanley noted in its report that AMD's server CPUs in the first three quarters of 2026
Shipment volume increased by approximately 50% year-over-year (compared to Intel’s 4% growth during the same period), and revenue increased by approximately 90%; the company has raised its guidance for server CPU revenue growth by 2027 from the previous 70% to over 100%, with supply constraints not limiting it as they did Intel.
AMD. Morgan Stanley estimates that AMD will account for just over 60% of the combined server CPU shipment growth next year, while Intel will lose a roughly equivalent share—even as
Even in a tight supply environment, where the IDM (integrated device manufacturer) model is theoretically most advantaged, Intel has failed to reverse its market share decline. The report also notes that Intel may not offer a competitive comparable product until late 2028 at the earliest, while AMD
The long-term growth runway remains clear.
AI
In terms of GPUs, AMD confirmed for the first time this quarter revenue from its Helios rack-scale products, with the company stating that all key customers have strong demand for 2027, and internal forecasts have been further raised since 90 days ago. Morgan Stanley has raised its 2027 GPU
Revenue expectations have been slightly raised by $500 million to $40 billion, with the baseline forecast of approximately 3 GW of installed capacity next year largely unchanged. However, the report also highlights the "cost" of growth: this quarter, AMD
Recognized $1.1 billion in accounting expenses related to warrants, resulting in a GAAP EPS lower than non-GAAP
Approximately 43% lower. Morgan Stanley believes that this significant cost, relative to the quarterly $3.5 billion in GPU revenue, should be reflected in AMD’s valuation discount, similar to market concerns about "circular financing" among large tech companies.
In addition, the PC business remains a concern. AMD’s guidance for client revenue in the fourth quarter reflects a sequential decline of approximately 23%, which is about $400 million lower than the latest consensus estimate prior to the earnings report, mirroring Intel’s recent earnings revision. However, since
PCs currently account for less than 10% of AMD's revenue and have a limited impact on overall profitability; Morgan Stanley expects client CPUs to bottom out in Q2 2026 (with year-over-year declines of over 30%).
Based on the new earnings forecast, Morgan Stanley assigns AMD a target valuation of approximately 20 times its 2028 fiscal year EPS ($27.59), corresponding to a $550 target price—representing about a 14% upside from the November 3 closing price of $483.90. The firm also provides a bullish case target of $750 and a bearish case target of $300. Morgan Stanley concludes that AMD’s execution in the server CPU market has been “exceptionally strong,” with
There is a clear preference for AMD over Intel on CPU topics; however, considering GPUs in 2027/2028
The business will account for 42% and 46% of its revenue respectively, while the industry leader is currently trading at only about 10 times its 2028 P/E ratio; AMD’s valuation premium of 20 times is “too wide,” and its 100% server growth rate may still struggle to keep up.
ARM camp, thus maintaining a "Hold" rating and waiting for a better entry opportunity.