Investing.com -- Advanced Micro Devices received upgrades from both Goldman Sachs and Bernstein after the chipmaker reported stronger-than-expected first-quarter results and provided a robust second-quarter outlook, with analysts pointing to agentic AI as a key driver of the company’s accelerating growth.

AMD reported first-quarter revenue of $10.25 billion and earnings per share of $1.37, topping Wall Street estimates of $9.9 billion and $1.28, respectively. Datacenter revenue came in at $5.78 billion, up 57% year-over-year, driven by server CPU strength.

The company guided second-quarter revenue to $11.2 billion, well above the Street’s $10.5 billion estimate, with datacenter revenues seen up double-digits sequentially and server CPUs expected to grow more than 70% year-over-year.

AMD shares surged 18% in premarket trading on Wednesday following the results.

Goldman Sachs upgraded AMD stock to Buy and lifted its price target to $450 from $240, pointing to structural tailwinds from the proliferation of agentic AI in enterprise and consumer workloads.

"We upgrade AMD to Buy with a 12-month price target of $450 given tailwinds to its server CPU business we expect from agentic AI, as well as upside in datacenter GPUs in 2027 and beyond," Goldman analyst James Schneider said in a note.

He expects the proliferation of agentic AI across enterprise and consumer workloads to act as a "medium-term tailwind" to the server CPU market, with AMD an "outsized beneficiary" of enterprise adoption. The analyst sees x86 architecture retaining staying power as AI agents interact with companies’ existing x86 infrastructure.

Bernstein also upgraded the stock to Outperform from Market-Perform, raising its price target from $265 to $525. The broker now models AMD earning more than $14 per share in 2027 and sees earnings approaching $20 in 2028.

"Given the agentic AI boom, we believe that management’s new outlook for a doubling of their prior TAM — to a 35% CAGR by 2030 reaching ~$120B — is looking potentially plausible," analyst Stacy Rasgon wrote.

"We have continually been surprised not only by the strength of AMD’s business but also by the strength of the stock. That being said, while many stocks have been climbing strictly on vibes lately the company deserves significant credit for a fundamental story that increasingly is looking real," they added.

Both firms highlighted AMD’s GPU opportunity as a secondary catalyst. OpenAI and Meta have announced strategic partnerships with AMD to deploy 6 gigawatts of AMD GPUs, with Goldman most bullish on the Meta deployment.

Rasgon noted that AMD’s two anchor GPU customers are "set to ramp into year-end," and that those figures have "still not appeared to be fully reflected in Street models."

He also pointed out that its "history with AMD bull calls is spotty at best" and acknowledged risks around the Helios GPU ramp, customer traction, supply, second-half PC demand, and overall AI sustainability, but added that the earnings power on display was "enough to win us over," and that the shares "probably go up from here even after the run."