AMD Confident in AI Growth, But Market Questions Whether Supply Can Keep Up

AMD delivered better-than-expected financial results for the second quarter of 2026, reporting revenue of $11.54 billion, representing a 50% year-over-year increase. The data center segment emerged as the primary growth engine, with revenue surging 107% year-over-year, driving overall company expansion. Despite robust operational performance and management’s explicit quantitative commitment to doubling data center revenue by 2027, market attention has pivoted from "whether demand exists" to "whether supply can keep pace."

On the product front, AMD’s flagship AI chip, the MI450, initiated initial shipments by the end of the third quarter of 2026, with expectations for large-scale production ramp-up during the fourth quarter and further acceleration into 2027.

Goldman Sachs maintains a positive outlook, retaining its "Buy" rating and setting a target price of $640. The firm believes AMD possesses all necessary conditions to exceed $40 billion in data center revenue by 2027, with strong server CPU growth effectively offsetting gross margin pressures during the early production phase of GPU products.

However, JPMorgan takes a more cautious stance, assigning a "Neutral" rating. The bank highlights that the gross margin dilution effect from the MI450 lineup will gradually materialize in the first half of 2027, and warrant dilution mechanisms from OpenAI and Meta will also impact long-term profitability. While acknowledging AMD’s multi-year growth opportunity, JPMorgan stresses that execution risks associated with the mass production of its first rack-scale product cannot be overlooked.

Supply chain bottlenecks are viewed as the biggest variable threatening AMD’s ability to deliver on its financial forecasts. AMD significantly increased its capital expenditures in the second quarter to $808 million, primarily allocated to hosting CoWoS advanced packaging equipment at outsourced semiconductor assembly and test (OSAT) facilities to secure production capacity for the Venice CPU.

HSBC points out that AMD is hosting equipment at OSAT providers such as SPIL and Powertech rather than at TSMC, indicating that first-tier suppliers have little remaining capacity headroom. The bank also warns of output risks stemming from lower yields at second-tier manufacturers, which could affect final production volumes.