Buy the weakness in this major chip stock, Truist says

Investing.com -- Truist told clients in a note to “buy the weakness” in one major chip stock after what it called a messy but ultimately encouraging fourth quarter, arguing that the company’s long-term earnings power far outweighs near-term imperfections.

Analyst William Stein stated that AMD is growing earnings at a “~45% CAGR through CY30 and trades at only ~11x CY30 EPS power,” adding that “it’s still a BUY.”

Truist said Q4 results beat expectations and Q1 guidance came in higher, even though a large portion of the upside was tied to an unusual China-related factor.

According to the firm, “65% of the revenues and all of the EPS beat were from selling a written-down China SKU.”

Despite that distortion, Truist noted that AMD reiterated a “60% DC CAGR, 35% total sales CAGR,” which it believes leads to “over $20 of EPS in 2030.”

Stein said the foundation of its bullish thesis is “strong customer engagement,” noting that industry contacts have confirmed the momentum behind AMD’s data-center and AI road map.

In Q4, revenue of about $10.3 billion beat consensus by roughly 6%, driven by “~9% upside in both Datacenter and Client segments.”

Truist highlighted accelerating deployments of Instinct MI350 GPUs, strong adoption of 5th-generation Epyc CPUs and management’s expectation that data-center revenue can grow “more than 60% annually over the next 3–5 years.”

The firm acknowledged that OpEx remains a drag, but said management reinforced plans for operating leverage in 2026. Truist lifted its 2027 earnings estimate to $10.11 and raised its price target to $283.

“Buy the weakness as the long-term growth message overwhelms the imperfections in Q4,” declared Stein.

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