On November 4, Jefferies reiterated its Buy rating on Advanced Micro Devices (AMD) and maintained a $650 price target.

The firm believes that AMD's server CPU business remains robust and its AI GPU deployment scale continues to expand, which will serve as the primary drivers of future earnings growth.

Jefferies noted that driven by strong demand for the new-generation Venice server processors, AMD has raised its 2027 server CPU business growth forecast from the previous 70% to over 100%.

As demand expands across cloud computing, enterprise customers, and AI agent-related workloads, the firm expects AMD's server CPU sales to reach $40 billion next year.

On the AI chip front, AMD expects its fourth-quarter AI GPU revenue to surpass server CPU revenue for the first time, with management indicating that the demand outlook has improved further compared to the third quarter. Jefferies maintained its revenue forecast of $42 billion for this business.

However, the firm also pointed out that rising memory chip costs could lead to a double-digit decline in PC market shipments next year, while uncertainties remain regarding AI chip supply capacity, return on investment, and GPU financing arrangements.