Bank of America Raises AMD Earnings Forecast While Lowering Price Target Due to Potential Share Dilution
Bank of America has raised its 2027 and 2028 earnings estimates for AMD following strong third-quarter performance, characterized by a 45% revenue increase and nearly doubled data center sales. Despite the optimistic business outlook and an upgraded server CPU growth forecast, the bank lowered its price target to $650, citing compressed valuation multiples across the semiconductor sector. A significant risk identified involves massive potential share dilution stemming from warrants granted to major AI customers OpenAI and Meta. These deals include rights for up to 160 million shares each, which could result in a new issuance of approximately 320 million shares—roughly 20% of the current share count—by 2030. While these warrants act as sweeteners to secure massive GPU deployments, they could reduce earnings per share by approximately 16% for existing shareholders.
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Topics: AI Deals Data Center Sales Earnings Forecast Price Target Change