Deutsche Bank reaffirms Hold rating on AMD with $250 price target ahead of Q1 earnings
The banking giant anticipates strong results for the semiconductor manufacturer, projecting significant revenue acceleration in its Instinct data centre GPU business by the end of the fiscal year.
Deutsche Bank has reaffirmed its Hold rating on Advanced Micro Devices with a price target of $250, issuing the decision on 29 April ahead of the company's first-quarter earnings report. The research firm expects the semiconductor manufacturer to deliver strong results for the first quarter and provide solid guidance for fiscal 2026. Analyst Ross Seymore noted that investors will be closely monitoring the performance of the EPYC server CPU segment, particularly given the recent momentum in the data centre compute space.
For the EPYC server CPU segment, Deutsche Bank forecasts a 10 per cent quarter-over-quarter growth rate for both the first and second quarters of fiscal 2026. While the outlook remains positive, the firm highlighted that supply constraints are likely to act as the primary factor limiting further expansion in the company's CPU business during this period.
In contrast to the steady growth expected for the CPU line, the Instinct data centre GPU segment is projected to see a significant acceleration in revenue later in the year. Deutsche Bank estimates that revenues for this segment will stabilise at approximately $2.6 billion per quarter during the first half of 2026. The firm anticipates this figure will accelerate to $6.2 billion by the fourth quarter, bringing the total annual revenue for the segment to $15 billion.
Gross margins are expected to remain resilient above 55 per cent through the first three quarters of the fiscal year. However, Deutsche Bank forecasts a decline to 54.5 per cent in the fourth quarter, attributing the drop to changes in product mix rather than operational inefficiencies.
The analysis underscores the dual nature of AMD's current market position as a global manufacturer of GPUs, microprocessors, and high-performance computing solutions. While the firm acknowledges the potential of AMD as an investment, it suggests that certain other artificial intelligence stocks may currently offer greater upside potential alongside reduced downside risk.
Deutsche Bank maintains that the company serves high-growth industries including gaming, data centres, and artificial intelligence, though the current rating reflects a cautious stance on the immediate equity valuation relative to peers. The firm's assessment comes as the market awaits confirmation of these forward-looking projections in the upcoming earnings release.
