Driven by unexpectedly strong performance from Intel's central processing unit (CPU) business, which caught Wall Street analysts off guard, shares of Advanced Micro Devices surged over 12%. The industry widely anticipates that the sector's positive momentum will extend to other leading CPU manufacturers.
Analyst Gil Luria of Davidson Investment Company stated in a Friday research report, "We previously identified CPUs as the next potential industry bottleneck. Intel's financial results indicate that this segment now possesses significant upside potential."
Intel's latest earnings report revealed a substantial increase in market demand for central processors, as enterprises accelerate their investments in artificial intelligence computing infrastructure, directly fueling a sharp rise in its stock price. This robust performance prompted investors to heavily buy shares of another chip giant, Advanced Micro Devices.
On Friday, AMD's stock price jumped more than 12%. The stronger-than-anticipated performance of Intel's CPU business led to industry assessments that this positive trend would benefit all major CPU makers.
Gil Luria noted in the Friday report, "CPUs are re-emerging as an indispensable core foundation in the AI era. With exploding demand for compute power from intelligent agents, computational workloads are gradually shifting away from graphics processing units (GPUs) supplied by companies like Nvidia. The once sluggish CPU market is experiencing a strong rebound."
Luria upgraded his rating on AMD stock from Hold to Buy. He also raised the company's revenue forecast and gross margin projection for 2026, setting a new price target of $375 for AMD, representing a 22% potential upside from Thursday's closing price.
The market upswing was also supported by Intel's second-quarter earnings guidance, which substantially exceeded market expectations. Other Wall Street analysts have also taken note of the broad strength in the CPU sector.
Citigroup analyst Atif Malik commented on Friday, "Intel now anticipates double-digit growth in server CPU shipments for 2026, whereas just six months ago, its previous outlook was for only modest growth." This analyst concurrently upgraded his rating on Intel stock from Hold to Buy.
Bolstered by the positive news from Intel, Wall Street generally holds an optimistic view regarding an overall recovery in sentiment for CPU manufacturers and data center equipment suppliers, with AMD positioned as a primary beneficiary.
Analyst Suji DeSilva of Rose Capital stated on Friday, "Factoring in the materialization of high-growth industry benefits from AI infrastructure, we have significantly raised our valuation target for Intel, aligning its valuation multiples with AI infrastructure peers like Advanced Micro Devices, Marvell Technology, Cadence Design Systems, and Argonne National Laboratory, all of which currently carry Buy ratings."
Simultaneously, Barclays analyst Tom O'Malley expressed concerns, suggesting that Intel might face the risk of losing market share to its competitor, Advanced Micro Devices.
He mentioned in his research report, "Our bear-case price target of $40 is based on a calculation using adjusted earnings per share of $0.85 for fiscal year 2027, corresponding to a price-to-earnings ratio of 47. This calculation already incorporates expectations of significant market share loss by Intel to AMD, along with other negative factors." During early trading on Friday, Intel's stock price was approximately $81.
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