Is Advanced Micro Devices (AMD) Still a Buy After Its 180% Plus Rally?

The rapid expansion of artificial intelligence is creating a major opportunity in the central processing unit (CPU) market, positioning Advanced Micro Devices, Inc. (NASDAQ: AMD ) for robust growth.

Bank of America strategists expect the server market to expand from approximately $61 billion to $211 billion by 2030. The firm estimates that roughly $180 billion of the $211 billion server CPU market in 2030 will be tied to AI workloads, creating a significant market for AMD's EPYC server processors.

AMD also ranks among Insider Monkey's 11 AI Stocks That Will Go to the Moon — but where does it rank among the other AI names on the list?

On September 25, the research firm reiterated a Buy rating on AMD. It raised its price target to $720 from $620, citing the company's opportunity to capture a larger share of the rapidly expanding CPU market.

Posonskyi Andrey/Shutterstock.com AMD's rally has already pushed expectations sharply higher, raising a tougher question: what does a $1 trillion valuation now demand from AMD's AI ambitions?

Agentic AI Could Boost Demand for AMD CPUs

BofA's higher price target comes as the firm expects agentic AI to increase demand for CPUs that coordinate workloads, manage data, and support increasingly complex AI systems.

Rather than replacing GPUs, CPUs are increasingly complementing them within AI infrastructure. This trend is already supporting AMD's CPU business.

The price target hike comes as BofA expects agentic AI to fuel demand for CPUs to coordinate workloads and manage data. CPUs increasingly complementing GPUs rather than competing with them drove growth in AMD CPU revenue in Q2. Client business revenue was up 23% year over year to $3.1 billion, driven by strong demand for Ryzen processors.

Additionally, Advanced Micro Devices, Inc. (NASDAQ:AMD) is well positioned to gain from AI infrastructure beyond GPUs. The company offers a wide range of platforms that combine EPYC CPUs with Instinct GPUs and networking technologies. That was one reason the company's data center revenue rose 107% in the second quarter to $6.72 billion, driven by growth in EPYC server CPUs and Instinct GPUs.

AMD's AI Opportunity Extends Beyond GPUs

BofA's bullish view does not depend on Advanced Micro Devices, Inc. (NASDAQ:AMD) replacing Nvidia as the dominant provider of AI accelerators. Instead, the firm sees AMD as a potential beneficiary of the broader evolution of AI computing architecture.

As AI workloads become more complex and increasingly autonomous, data centers require CPUs, GPUs, networking, and other components to work together efficiently. This creates an opportunity for AMD to benefit from the overall expansion in AI infrastructure, even if GPUs remain the primary engines for many AI workloads.