AMD (NASDAQ:AMD) remains on strong footing heading into 2025, according to Northland analysts, who reiterated an Outperform rating and a $175 price target on the semiconductor giant. Despite recent market speculation, the analysts see multiple tailwinds supporting AMD’s growth, particularly in AI and server markets, as well as a shift in industry sentiment that could benefit the stock.
Recent rumors surrounding AMD’s reported orders for CoWoS (Chip-on-Wafer-on-Substrate) technology at TSMC have been misunderstood, the analysts noted. Instead, these orders are likely shifting to Outsourced Semiconductor Assembly and Test (OSAT) providers, given TSMC’s current CoWoS production constraints.
Looking at the company’s broader market position, AMD appears poised to turn previous headwinds in embedded chips and gaming into moderate tailwinds in 2025. Meanwhile, AI and data center demand remain robust, positioning AMD to gain market share in these high-growth segments.
The analysts also addressed ongoing speculation about Microsoft’s dissatisfaction with AMD, calling it largely dependent on perspective. While some reports suggest frustration over AMD’s open-source AI software, the broader narrative in cloud computing suggests that hyperscalers have grown increasingly frustrated with NVIDIA—particularly with its data center product gross margins reaching as high as 90% and its aggressive competitive stance.
The recent emergence of DeepSeek, a Chinese AI startup leveraging an open-source framework, has further validated AMD’s approach, suggesting that cloud service providers (CSPs) are increasingly interested in alternatives to NVIDIA’s proprietary CUDA software ecosystem. AMD has already proven its ability to compete with dominant incumbents in the server market, and with hyperscalers maintaining visibility into its product roadmap, confidence in the company’s execution remains strong.
Despite a generally negative sentiment heading into AMD’s earnings report, the analysts believe that even results that are “not as bad as feared” could serve as a catalyst for a stock rebound. With AI, data center, and open-source software momentum building, AMD appears well-positioned to navigate market challenges and sustain long-term growth.