Wells Fargo Stands by $615 AMD Target After Anthropic Deal

AMD's stock has been one of the standout performers in the semiconductor sector this year, with shares up more than 170% year-to-date and the company's market capitalization approaching $1 trillion. While much of the attention has focused on AMD's progress in graphics processing units (GPUs) for artificial intelligence, the company's server CPU business has also been quietly gaining ground against Intel. In late June, Wells Fargo analyst Aaron Rakers raised his price target for AMD to $615 from $505, citing accelerating adoption of AMD's sixth-generation EPYC Venice processors and robust demand from data center customers.

On July 22, AMD confirmed a deal with Anthropic that could be worth up to $5 billion, further strengthening its position in the AI infrastructure market. The agreement includes up to 2 gigawatts of Instinct MI455X GPUs and Helios rack-scale systems, with the first gigawatt scheduled for deployment in the first half of 2027. AMD's equity investment in Anthropic is tied to specific deployment milestones, meaning the company will invest as Anthropic meets agreed targets. This structure reflects a growing trend among AI partnerships, where capital commitments are closely linked to actual infrastructure rollouts.

AI Partnerships and Revenue Projections

The Anthropic deal follows similar arrangements AMD has announced with Meta and OpenAI, each involving multi-gigawatt commitments to AMD-based infrastructure. Both Meta and OpenAI are expected to begin initial 1GW deployments in the second half of 2026. According to reporting by TheStreet, these partnerships are seen as critical for AMD's efforts to close the gap with Nvidia, particularly in the software ecosystem where Nvidia's CUDA platform has long been dominant.

Wells Fargo's Rakers maintained his $615 price target after the Anthropic announcement, stating that the deal gave him increased confidence in his already above-consensus estimates. He projects AMD's data center GPU revenue will reach $40.6 billion in 2027, nearly triple his 2026 estimate of $15.6 billion, and rise to almost $63 billion by 2028. These forecasts are well ahead of Wall Street consensus, with Rakers' 2027 and 2028 earnings-per-share estimates running 3% and 8% above the Street, respectively. His valuation is based on a 33-times multiple of projected 2028 earnings.

Server CPUs: The Underappreciated Growth Driver

While AMD's GPU story has captured headlines, the June price target increase was driven primarily by the company's server CPU momentum. Rakers raised his server CPU revenue estimates to $16 billion for 2026, $20.5 billion for 2027, and $25 billion for 2028, with the 2026 figure representing 68% year-over-year growth. The sixth-generation EPYC Venice processor, built on 2nm architecture, began ramping production in late May 2026, with volume shipments expected through the second half of the year. More customers are validating and deploying Venice than any previous EPYC generation, reflecting the growing importance of CPUs in AI inference workloads alongside GPUs.

AMD's stock closed June at $580.91, hitting a new 52-week high of $584. Such a rapid run-up in share price often leads analysts to become more cautious, but Rakers remains confident that AMD's earnings growth potential justifies the current valuation. The company's expanding relationships with hyperscale cloud providers and leading AI labs are seen as key to sustaining this momentum.

Competitive Positioning and Market Signals

AMD's recent announcements bring its total AI compute commitments to roughly 14 gigawatts across Anthropic, Meta, and OpenAI. Microsoft also revealed plans to expand its Azure cloud platform with AMD technology in the same week as the Anthropic deal. These moves are part of AMD's broader strategy to build deep technical partnerships with the organizations that will shape the next generation of AI infrastructure.

One notable aspect of the Anthropic agreement is the absence of equity warrants, which were included in AMD's previous deals with Meta and OpenAI. Barclays analyst Tom O'Malley described this as a sign of AMD's improving negotiating position in a supply-constrained market. The multi-year engineering collaboration with Anthropic will focus on optimizing Claude, Anthropic's AI model, to run efficiently on AMD's ROCm software stack and Instinct GPUs-a direct effort to address AMD's historical software disadvantage versus Nvidia.

For investors, these developments highlight the shifting dynamics in the semiconductor industry as AI workloads become a central driver of demand. While Nvidia remains the dominant player in AI GPUs, AMD's expanding partnerships and technical progress are forcing a reassessment of its long-term growth prospects. As HSBC's recent upgrade of Apple's stock target shows, the market is increasingly rewarding companies that can demonstrate a credible path to AI-driven revenue growth. For more on how analysts are adjusting targets for major tech stocks amid the AI boom, see this analysis of Apple's AI positioning and product pipeline here.

According to AMD's most recent quarterly filing, the company reported $22.7 billion in revenue for the trailing twelve months ending June 2026, up from $16.4 billion a year earlier. Data center segment revenue accounted for more than 40% of the total, reflecting the growing importance of AI and cloud infrastructure to AMD's business model. The company's gross margin improved to 53%, driven by higher-margin data center products and increased operating leverage.

As the AI infrastructure race accelerates, investors should pay close attention to how chipmakers structure their partnerships, allocate capital, and build out their software ecosystems. The interplay between hardware innovation and software compatibility will likely determine which companies capture the largest share of future AI spending. For AMD, the next phase of growth may depend as much on its ability to deliver robust, developer-friendly platforms as on raw chip performance.