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Investing.com -- Bank of America upgraded Advanced Micro Devices (NASDAQ:AMD) to Buy from Neutral, citing a “compelling” risk-reward profile and potential for 20%+ top-line growth in the next two years.

The firm raised its price objective to $120 from $105, reflecting increased earnings estimates and higher confidence in AMD’s product roadmap.

Following AMD’s first-quarter beat and a stronger-than-expected Q2 sales outlook of $7.4 billion, 10% above BofA’s forecast despite a $700 million China headwind, analysts said the results “address our pre-call concerns” about AI restrictions and GPU competition from Nvidia (NASDAQ:NVDA).

“We find risk-reward compelling and upgrade AMD to Buy,” BofA analysts wrote, highlighting five key drivers: “1) potential to deliver 20%+ topline growth in CY25E and CY26E, despite China headwinds, 2) continued share gains in PC/server CPU against INTC, 3) meetable/beatable targets for AI GPU sales… 4) EBIT margin upside towards 30% in CY27E vs 22% in CY25E, and 5) compelling valuation at 18x CY26E PE.”

BofA raised its 2025–2027 earnings forecasts by up to 11% and expects margin expansion driven by improved product mix.

 “We now estimate AMD PC CPU ASPs to be ahead of INTC ($143 vs. $133) for the second time in history,” analysts wrote, projecting AMD’s PC market value share to rise to 24.5% in 2025 from 18.2% in 2024.

On GPUs, BofA sees upside to its $6.2 billion sales estimate for 2025 as AMD launches its MI350 chips in the second half of the year.

Still, the firm warned of risks from gaming demand volatility and ongoing competition from Nvidia and ARM. AMD “remains a distant #2 in GPU” and ARM is gaining ground in CPU workloads, BofA noted.

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