Why Nvidia rival AMD may see a 40% rip in its stock

A screaming buying opportunity may exist in AMD ( AMD ) after a post-earnings sell-off earlier this month.

Raymond James analyst Simon Leopold upgraded his rating on AMD to Strong Buy from Outperform in a new note on Tuesday. He lifted his price target to $641 from $565, which assumes neatly 40% upside from current price levels.

The new price target puts Leopold above the average price target of his peers at $613, per Yahoo Finance AlphaSpace data. About 72% of Wall Street analysts who cover AMD rate the stock a Strong Buy or Buy.

AMD stock rose 5% in afternoon trading in response.

Leopold thinks AMD, with its powerful AI chips, will be a key player in the agent-driven workforce. Moreover, he sees the server central processing unit (CPU) market increasing at a 44% five-year compound annual growth rate to about $201 billion by 2030.

"AMD offers the strongest combination of direct earnings leverage, datacenter positioning and market-share gains," Leopold said.

The chipmaker has had a series of wins this summer.

AMD beat Wall Street expectations across the board for the second quarter earlier this month, posting record non-GAAP earnings per share of $1.66 versus consensus estimates of $1.61. Total revenue surged 50% year over year to a record $11.5 billion, clearing analyst projections of approximately $11.34 billion.

The strong top- and bottom-line performance was fueled by the company's Data Center segment. Revenue more than doubled year over year to $6.7 billion behind robust demand for EPYC server CPUs and Instinct AI accelerators.

AMD projected second-half 2026 server CPU revenue to grow 80% year over year and 70% in 2027. It expects data center revenues to more than double in 2027, with AI graphics processing units (GPUs) growing well over 100%.

AMD also unveiled its next-generation AI chips, headlined by the Instinct MI450 Series GPUs and the 6th Gen EPYC Venice CPUs. The new chips are designed to power AMD's new Helios rack-scale AI systems , which combine GPUs, CPUs, networking, and software into an integrated platform for training and running large AI models.

The product announcement came alongside two important new deals.

AMD said Microsoft ( MSFT ) will deploy Helios across Azure AI services beginning in the second half of 2026.

It also announced a major tie-up with Anthropic ( ANTH.PVT ) that significantly expands its push to challenge rival Nvidia in the AI infrastructure market.

Anthropic plans to deploy up to 2 gigawatts of the Instinct MI450 GPUs in its Helios system beginning in the first half of 2027 — a deal that could be worth tens of billions of dollars over time. AMD also committed to invest up to $5 billion in Anthropic, marking one of the chipmaker's largest strategic investments ever.