Northland analysts reaffirmed an Outperform rating and a $175 price target for AMD (NASDAQ:AMD), highlighting the company’s strong position across AI GPUs, server CPUs, and PC clients. With headwinds in the embedded and gaming segments easing, AMD is set to deliver substantial growth through 2025.
AMD’s gains in the AI market are driven by its competitive roadmap and superior total cost of ownership (TCO). AI-related revenue is projected to surge to $9.5 billion in 2025, up from $5.2 billion, reflecting a 7% increase in the first half of the year compared to the second half of 2024. The ramp-up of AMD’s MI325X chip is expected to be a game-changer, offering hardware performance competitive with NVIDIA’s H200. While software remains a key challenge, AMD’s hardware advancements put it in a strong position for growth, according to the analysts.
In the server market, AMD continues to outpace Intel, with early indications showing its Turin CPUs outperform Granite Rapids in most workloads. Non-AI data center revenue is forecasted to grow by 26% year-over-year in 2024 to $7.7 billion, with an additional 10% growth projected in 2025. These estimates are considered conservative, leaving room for upside potential.
The PC client segment also offers a compelling growth story. With Microsoft ending support for Windows 10, an estimated 1.2 billion systems will need upgrading. AMD is poised to benefit, with approximately 40% of these systems, or 480 million units, expected to be replaced over the next 18 months. Despite elevated channel inventory in the PC market, AMD’s inventory levels are healthy, and spot shortages highlight robust demand for its products.
With leadership across key markets, a strong product pipeline, and favorable industry tailwinds, AMD is well-positioned for substantial upside, making it a top pick for 2025 at Northland.