Wedbush Sees AMD’s Microsoft Deal as the Start of a Sharp AI Ramp, But It’s Not a Reason to Dive In Here

Advanced Micro Devices' (AMD) Advancing AI 2026 event in San Francisco on July 22 gave investors a clearer look at the company's forward direction. The main focus was Helios, AMD’s rack-scale AI system, which is becoming a big part of its push into AI hardware.

Wedbush thinks that could be the catalyst for the stock’s next move. The firm sees Microsoft's (MSFT) deal with AMD as the start of a much bigger rollout, not just a single win.

AMD also has other recent wins with Anthropic and Rackspace Technology (RXT), which adds more weight to the story.

The key question now is whether AMD can turn that momentum into real sales across Microsoft. If it can, the stock may still have more room to run. 

AMD’s AI Breakout Gains

Based in Santa Clara, California, Advanced Micro Devices designs and sells high-performance computing chips for data centers, PCs, gaming, and embedded systems. Its portfolio includes CPUs, GPUs, and AI accelerators that power cloud infrastructure, enterprise workloads, and next-generation artificial intelligence deployments.

AMD has a year-to-date (YTD) gain of 150% and a 52-week gain of 237.5%.   

Its market cap is valued at $900.6 billion with a forward price-to-earnings ratio of 87.14 times compared with the sector median of 32.25 times, while its PEG ratio of 1.58 times sits above the sector median of 0.86 times. 

AMD’s Q1 CY2026 report, released on May 4, showed strong revenue of $10.25 billion versus $9.90 billion expected, up 37.8% year-over-year (YOY) and ahead of estimates by 3.6%. Net income came in at $1.383 billion, even though it was down 8.47% from the prior year.

The earnings beat carried through the rest of the report. Adjusted EPS came in at $1.37 versus $1.29 expected, marking a 5.8% beat. 

Adjusted EBITDA rose to $2.75 billion from $2.20 billion expected, with a 26.8% margin and a 24.7% beat, while operating margin improved to 14.4% from 10.8% a year earlier. Free cash flow margin also strengthened to 25% from 9.8%, showing that AMD is converting more of its sales into cash.

Even so, the cash flow line was softer. Operating cash flow fell to $2.955 billion, down 61.67%, and net cash flow slipped to $40 million, a 97.71% decline.   

AMD’s Commercial Deal Flow

Microsoft is rolling AMD’s next-gen Instinct and EPYC chips into Azure through a bigger long-term partnership. The deal centers on Helios, AMD’s rack-scale AI system for frontier-model inference, and shipments to Microsoft are set to begin in the second half of 2026.

AMD is also widening its reach beyond Microsoft. It announced a partnership with Anthropic to deploy up to 2 gigawatts of AMD Instinct MI450 Series GPUs in Helios systems, with the first gigawatt expected in the first half of 2027. AMD said it could invest up to $5 billion in Anthropic, which makes the relationship even tighter.

Rackspace adds another real deployment to the mix. The company signed a definitive agreement for a phased rollout of 30 MW of AMD AI compute across its global data centers, starting in late 2026 and running through 2028. That setup will use AMD Instinct GPUs, including MI355X and MI350P, along with AMD EPYC CPUs inside Rackspace’s Enterprise AI Cloud architecture.

These deals matter because they show AMD moving from isolated wins to named, measurable deployments.   

AMD’s Next Earnings Test 

AMD heads into its August 4 earnings release after a sharp run, and analysts are still raising the bar. The current quarter ending June 2026 calls for $1.35 in earnings per share, up from $0.27 a year earlier, which points to 400% YOY growth. That is the kind of setup that keeps the stock tied to execution, not just sentiment.

UBS analyst Timothy Arcuri raised his price target ahead of AMD’s Advancing AI event on July 22 and July 23, and he called AMD his firm’s top semiconductor pick. He expects stronger CPU and GPU roadmaps, new AI partnerships, and a growing list of data center customers, with supply chain checks suggesting the momentum could hold through 2027.

Jefferies analyst Blayne Curtis is also leaning bullish. He has a “Buy” rating on AMD and a $615 price target.

The wider analyst crowd remains constructive, with 45 surveyed analysts reaching a consensus “Strong Buy” rating. Their average price target is $543.83, a marginal upside 1.5% ahead. 

Conclusion

AMD’s Microsoft deal looks like more than a headline now. With real rollout plans behind it, the stock still has room to respond if the next updates confirm the AI demand is sticking. The likelier path is higher, but only if AMD keeps turning these announcements into revenue. If that happens, the market should continue to give the shares credit.