Shares of Advanced Micro Devices (AMD) moved higher in premarket trading on Monday while its largest rival, Nvidia (NVDA), slipped, after Oppenheimer upgraded the chipmaker and forecast steep growth for its data center business.

AMD gained 1.4% to $455.49 before the opening bell. Both stocks have had a difficult month, with AMD down 24% and Nvidia down 17% through Friday's close.

The Upgrade and the $600 Target

The lift for AMD followed a Sunday note from Oppenheimer analyst Rick Schafer, who moved the stock to Outperform from Perform and set a $600 price target. That target sits roughly 34% above Friday's close of $449.04, a session in which AMD jumped 11%, meaning the stock arrived at Monday with some momentum already in place.

What Oppenheimer Is Counting On

Schafer sees data centers as the engine of AMD's growth. He expects that business to expand 135% next year and account for 85% of AMD's total sales. His model also includes roughly 3 gigawatts of deployments in 2027 and 4 gigawatts in 2028 — large numbers on which the entire call leans.

That projected mix also highlights AMD's growing dependence on data center demand: with one segment at 85% of sales, results would hinge on the capital-spending cycles of a handful of hyperscale customers.

He expects OpenAI and Meta to drive growth through the first quarter, with Anthropic expected to ramp up late in that quarter. Schafer also pointed to spending from Oracle, Microsoft, and Saudi Arabia's Humain. The top five cloud providers are expected to spend about $1.3 trillion on capital expenditures in 2027, up from $800 billion this year.

On the product side, AMD has committed to a one-year chip cadence, which translates to the MI500 in 2027 and the MI600 in 2028 — dates that double as concrete checkpoints for the deployment schedule the call depends on. Oppenheimer also expects data center GPU sales to pass EPYC server CPU revenue. Even so, the CPU line is projected to more than double next year.

The Earnings Backdrop

Schafer's thesis leaned on AMD's third-quarter report from last week. Revenue came in at $13.38 billion, up 45% from a year ago and $279 million above the top of guidance. Data Center revenue rose 97% from a year earlier and 27% from the prior quarter. CEO Lisa Su said the company expects sales to grow 80% or more next year. Schafer's 135% data center forecast runs well ahead of that 80%-plus companywide outlook, a gap that reflects how much of the upgrade case rests on a single segment.

Other analysts have weighed in as well. DA Davidson raised its target to $600 with a Buy rating, StoneX set a $685 target, and TD Cowen kept a Buy at $675. Not everyone is cheering: HSBC maintained a Hold rating with a $540 target, and RBC stayed at Sector Perform with the same $540 target. The spread itself maps the debate, with the two cautious ratings sitting at the bottom of a range that stretches to $685.

Nvidia's Separate Turmoil

Schafer's note did not touch on Nvidia's situation. On Sunday, Nvidia's board said it would independently investigate whether CEO Jensen Huang was targeted by a foreign intelligence effort, following a relationship with an executive suspected of working for Chinese intelligence. The stock fell 5.2% to $176.90.

Huang apologized in a letter to staff for being unfaithful to his wife. "I support the investigation and will cooperate fully," he said.

Source: CoinCentral