Goldman Sachs flags AMD server CPU demand as key upside driver heading into earnings

09 Jul 2026, 15:03 · The Fresno Bee

I have covered AMD twice this July. First, Goldman Sachs raised its price target to $640 from $450 on July 5. And before that, when Wells Fargo made the same fundamental argument at the start of the month.

Both times, the central thesis was the same: The server CPU story is being underappreciated, while the GPU narrative gets all the attention.

Goldman is now going deeper ahead of AMD's Aug. 4 earnings report, and the note shared with me at TheStreet makes the case more specifically than either price target call did.

The "powerful advantage" Goldman sees heading into the print is not the Instinct MI450 GPU ramp. Not the hyperscaler AI spending surge. And not the balance sheet. It is the EPYC server CPU, and it is being driven by something the market has only recently started to price correctly: agentic AI.

Advanced Micro Devices (AMD) ranks as the ninth-best performing S&P 500 component year to date, according to Slickcharts. The question Goldman is answering is whether the earnings on Aug. 4 keep it there.

Also Read: History of AMD: Timeline and Facts

What Goldman's research actually says about AMD heading into the print

In the note shared with me at TheStreet as part of its broader semiconductor earnings preview, Goldman Sachs analyst James Schneider specifically outlined AMD's setup.

The firm expects upside to Q2 results and Q3 guidance, with Data Center strength as the primary driver and tepid PC trends as the partial offset. Goldman's Q2 and Q3 EPS estimates are 1% above the Street consensus.

Also Read: Advanced Micro Devices Inc. Latest News and Stories

More importantly, their 2027 EPS estimate of $14.50 is 13% above Street, according to the note. That gap is the real signal: Goldman believes the market is underestimating AMD's earnings power in 2027 by a material amount, and server CPUs are the mechanism.

AMD guided for 70% year-over-year growth in server CPU revenues for Q2, according to the note. Goldman believes commentary on agentic AI driving server CPU demand could push data-center estimates higher both for Q3 guidance and the 2027 outlook.

More AMD:

The firm raised its EPS estimates by approximately 7% on average heading into the print, driven by higher server CPU revenues and margin improvements, according to the note.

The note is direct about what investors will focus on: potential server CPU upside beyond the 70% growth guide, updates on Meta and OpenAI MI450 GPU deployments, and margin progression signals. All three have the potential to move the stock materially on earnings day.

Goldman is watching agentic AI as specific CPU demand driver

The mechanism Goldman identified is not just "AI is good for chips." It is more specific than that.

Agentic AI, where multiple AI systems interact autonomously to complete multi-step tasks, requires a fundamentally different infrastructure mix than training large language models. Training is GPU-intensive and concentrated in a few massive clusters.

Inference and agentic workflows distribute compute across a much larger number of servers where high-performance CPUs handle orchestration, routing, memory management, and general-purpose logic alongside the specialized accelerators.

Every enterprise deploying AI agents at scale needs more EPYC processors. AMD holds significant market share in the data center CPU space and is in active ramp on Venice's 2nm EPYC generation, with more customers validating the platform than any prior generation, according to company disclosures.

Goldman sees AMD's Advancing AI day on July 23, scheduled before the Aug. 4 earnings print, as an additional positive catalyst. The firm expects AMD to share a constructive forward outlook, for server CPU demand sustainability, and incremental details on data-center GPU customer engagements at the event.

Advanced Micro Devices (AMD) ranks as the ninth-best performing S&P 500 component year to date.

Caroline Brehman / AFP via Getty Images

AMD's Q1 2026 foundation and what Q2 needs to deliver

AMD's first-quarter 2026 results, reported May 5, showed the trajectory Goldman is extrapolating from, according to the company's earnings release.

Total revenue of $10.3 billion was up 38% year over year .
Data Center revenue was $5.8 billion, up 57% year over year.
Non-GAAP EPS of $1.37 set a record alongside record free cash flow.

We are seeing strong momentum as inferencing and agentic AI drive increasing demand for high-performance CPUs and accelerators.

For Q2 2026, AMD guided revenue of approximately $11.2 billion, up roughly 46% year over year, with a non-GAAP gross margin of approximately 56%, according to AMD's first-quarter 2026 results.

The hyperscaler commitment underpinning that guidance is broad. Meta is committed to deploying up to 6 gigawatts of AMD Instinct GPUs and will be a lead Venice CPU customer, based on AMD announcements.

AWS, Google Cloud, Microsoft Azure, and Tencent have all expanded EPYC-powered cloud instances. AMD and Samsung are collaborating on HBM4 supply for next-generation GPU platforms and advanced DRAM for EPYC CPUs, according to AMD disclosures.

The earnings bar and why Goldman thinks AMD can clear it

The broader semiconductor earnings context matters here. According to FactSet's July 2 earnings insight, the Semiconductors and Semiconductor Equipment industry is expected to report 131% year-over-year earnings growth in Q2.

That's the largest single contributor to IT sector earnings growth. Without semiconductors, the IT sector earnings growth falls from 63.3% to 25.7%.

Also Read: AMD's stock split history (& prospects) explained

As mentioned, AMD is entering this earnings season ranked ninth in year-to-date S&P 500 performance, according to Slickcharts, with the stock up over 150% year to date according to Yahoo Finance.

The sector has outperformed dramatically, which is exactly the trading challenge Goldman flagged in the broader note. The SOX index is up 88% in Q2 versus the S&P 500's 14%, meaning the bar for the earnings to move stocks further is meaningfully higher than it was six months ago.

Goldman's answer to that challenge is that AMD specifically still has a credible upside path.

Why? The CPU story has not been fully priced in, the MI450 ramp detail has not been quantified, and the 2027 estimates still have a 13% gap to close. On Aug. 4, all three of those gaps get a chance to close.

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This story was originally published July 9, 2026 at 8:03 AM.