Advanced Micro Devices (AMD) heads into its third-quarter earnings report on November 3rd with a key question hanging over the stock: can it beat expectations? According to Wedbush Securities, the answer may hinge on one thing—demand for the company's server central processing units (CPUs).
In a research note, Wedbush argued that AMD's most likely source of an upside surprise is its server CPU business, which sells chips that power data centers and enterprise computing. The firm expects that "agentic AI"—a term for software that can plan and act autonomously—will keep demand for computing power ahead of supply, a dynamic that could boost AMD's results.
What is agentic AI and why does it matter?
Agentic AI refers to a new wave of artificial intelligence systems that don't just respond to prompts but can set goals, make decisions, and execute tasks on their own. These systems require massive amounts of computing power, both for training and for running in real time. That demand is spilling over into the hardware market, benefiting companies like AMD that make the chips used in data centers.
Wedbush's view is that this demand is growing faster than the industry can add supply. If that holds, it could mean stronger-than-expected sales for AMD's server CPUs, which are a major revenue driver. The firm also expects AMD's management to reaffirm its earlier guidance that data center revenue will more than double by 2027—a bold target that reflects the company's confidence in the AI boom.
AMD has been a key player in the AI chip race, competing with Nvidia in the market for accelerators and GPUs. But its server CPUs, which are used in traditional data center servers, remain a critical part of its business. Wedbush's note suggests that these CPUs could be the bright spot in the upcoming earnings report.
What this means for investors
For everyday investors, the key takeaway is that AMD's earnings report could be a volatile moment for the stock. If server CPU demand surprises to the upside, the company might beat Wall Street's expectations, which could lift the share price. On the other hand, if demand falls short, the stock could suffer.
Wedbush's comments also highlight the broader trend of AI-driven demand rippling through the tech sector. Similar stories are playing out across the industry—for example, ABB's data center orders have surged as AI demand powers growth, and Infineon's AI demand shines, though its 2027 margin outlook is the real test. These examples show that the AI boom is not just about chip designers like AMD; it's also boosting suppliers and equipment makers.
Investors should also note that AMD's data center revenue target for 2027 is ambitious. If management sticks to that view, it signals confidence in sustained demand. But such long-term projections are inherently uncertain, and the market will be watching for any signs of weakness in the near term.
What to watch on November 3rd
When AMD reports earnings after the market close on November 3rd, investors will be looking at several key metrics. The most important will be data center revenue, which includes both server CPUs and AI accelerators. Wedbush's note suggests that server CPUs could be the surprise driver, but the company's overall data center performance will be the headline number.
Another factor to watch is guidance. AMD's management has previously said it expects data center revenue to more than double by 2027. If they reiterate that target, it could reassure investors that the AI boom is still on track. If they trim it, that would be a red flag.
The broader market context also matters. Tech stocks have been sensitive to interest rates and economic data, and AMD is no exception. A strong earnings report could boost the entire semiconductor sector, while a weak one could drag it down.
For those who own AMD shares or are considering buying them, the earnings report is a critical event. But it's important to remember that one quarter doesn't define a company's long-term trajectory. The AI-driven demand cycle is still in its early stages, and AMD is well-positioned to benefit if it continues.
Wedbush's note is just one analyst's view, but it underscores the importance of server CPUs to AMD's near-term prospects. As the company prepares to report, all eyes will be on whether that demand materializes.
