Advanced Micro Devices (AMD) shares declined approximately 6% on Wednesday as a widespread selloff in semiconductor stocks weighed on the sector. The drop came despite a flurry of bullish analyst actions, with several major brokerages raising their price targets on the stock and reaffirming long-term optimism driven by artificial intelligence (AI) opportunities.
The broader weakness hit other chipmakers hard: Micron Technology fell 9%, Lam Research dropped more than 4%, and Intel declined 5%. The VanEck Semiconductor ETF (SMH) also lost nearly 3%, reflecting broad pressure across the industry. Separately, ARK Invest trimmed its AMD exposure by selling 9,742 shares through its ARK Innovation ETF (ARKK), valued at approximately $5.34 million, continuing a recent trend of reducing holdings.
Analysts Raise Targets on AI Growth Expectations
Despite the day's decline, several Wall Street firms became more optimistic about AMD's long-term prospects, citing expanding AI opportunities and improving supply chain conditions. UBS maintained its Buy rating and raised its 12-month price target to $700 from $670. Analyst Timothy Arcuri noted that AMD is positioned to win additional customers for its AI accelerators and expand its data center semiconductor business. “Customer-wise, we have always maintained that Amazon will be a major MI450x customer, and we now believe Anthropic might also be on the customer list,” Arcuri wrote. He also highlighted potential partnerships with Cerebras Systems on fast inference solutions and a deeper push into custom ASICs for data centers.
UBS pointed to easing capacity constraints at Taiwan Semiconductor Manufacturing, which provides advanced packaging for AMD's AI accelerator chips. “Overall, our supply chain work is very bullish, with significant upticks in CoWoS allocation for C2027,” Arcuri added. The brokerage also identified AMD's “Advancing AI 2026” event, scheduled for July 22-23 in San Francisco, as a potential catalyst.
KeyBanc maintained its Overweight rating while raising its price target to $725 from $530, citing expanding server CPU production capacity and the expected second-half 2026 ramp of AMD's MI455 AI GPU and Helios platform. The firm expects AMD's server CPU shipments to increase between 15% and 20% this year. Bank of America raised its target to $620 from $550, and TD Cowen increased its forecast to $675.
AI Demand and China Developments Remain in Focus
Analyst optimism comes after AMD shares more than doubled over the past three months, climbing 112% through Tuesday as demand for AI infrastructure accelerated. The company has continued gaining market share in server processors while securing agreements with AI companies, including OpenAI. According to LSEG data, 45 of the 55 analysts covering AMD rate the stock either Buy or Strong Buy.
Investor sentiment toward semiconductor stocks also received support from Goldman Sachs data cited by The Kobeissi Letter, which showed hedge funds purchased US semiconductor shares last week at the fastest pace in at least three-and-a-half years. Semiconductor stocks now represent about 10% of total hedge fund exposure, below the nearly 14% peak recorded in May.
AMD also remained in focus after Reuters reported that Zhuhai Hengqin Yunxiang Zhisheng Network Technology, a subsidiary of Chinese cloud computing company Kingsoft, received US approval to use certain AMD AI chips that compete with Nvidia's H200 products. China remains an important market for AMD, accounting for more than 22% of the company's fiscal 2025 sales, compared with more than 24% in fiscal 2024.
For context, other tech stocks have also seen analyst upgrades amid AI tailwinds. For instance, Microsoft Stock Gains 2% as Evercore Lifts Target, Analysts Eye AI Capex and Nvidia Dips 3% Amid Market Weakness, But Analysts See 50% Upside on AI Demand highlight the broader trend. Meanwhile, Micron, AMD, Intel Lead Premarket Chip Rebound as Analysts Reaffirm AI Demand Thesis shows the sector's volatility.
This article is for informational purposes only and does not constitute financial advice.
