Shares of Advanced Micro Devices rose sharply on Wednesday, supported by a broader market rally following a two-week ceasefire agreement between the United States and Iran, as well as renewed optimism among Wall Street analysts.
The stock gained more than 4% during trading, extending its strong performance of recent months.
The rise came amid improving investor risk appetite after US President Donald Trump announced a temporary suspension of hostilities with Iran, easing concerns over energy supply disruptions and inflationary pressures.
The ceasefire calls for the reopening of the Strait of Hormuz, a key global shipping lane whose closure had driven up fuel prices and disrupted global supply chains.
However, the ceasefire showed early signs of strain after Iran cut off oil tanker traffic through the Strait of Hormuz following intensified Israeli strikes in Lebanon.
Ceasefire-related rally benefits tech stocks
AMD’s gains largely reflected broader market movements, with stocks rising globally on expectations of stabilizing geopolitical conditions.
The reopening of the Strait of Hormuz should reduce fuel costs, which had soared during the conflict, weighing on global growth and business margins.
Lower energy prices are seen as particularly favorable for growth-oriented sectors, such as technology, where valuations are sensitive to macroeconomic conditions and interest rate expectations.
Trading activity in AMD stock remained high, with around 16 million shares traded during the session, although still below its three-month daily average volume of around 36 million shares.
The stock has now gained 4.2% for the day and is up 2.77% since the start of the year, showing a remarkable increase of 193% over the last 12 months.
Analyst optimism strengthens ahead of earnings season
To fuel this positive momentum, Goldman Sachs analysts named AMD as one of their top recommendations heading into the first-quarter earnings season for semiconductor makers.
This bullish stance follows a recent wave of selling in the technology sector, which has caused AMD’s PEG (growth-adjusted price-to-earnings) ratio to fall below the global average – a level that has not been reached since the early 2000s after the bursting of the Internet bubble.
Wall Street sentiment towards AMD remains generally constructive. The consensus on the stock is a “Moderate Buy” recommendation, based on 21 Buy and eight Hold recommendations over the past three months.
The average analyst price target of $284.68 implies more than 22% upside potential from current levels.
Strong fundamentals and demand for AI support outlook
Beyond short-term catalysts, AMD’s fundamentals continue to attract investors’ attention. The company benefits from growing demand for semiconductors linked to artificial intelligence, particularly in data centers and high-performance computing.
A wave of chip demand fueled by “Agentic AI” is bolstering AMD’s business prospects, according to Citigroup analysts. The company’s server CPU market share exceeded 40%, providing a solid foundation for future revenue growth and pricing power.
Separately, UBS maintained a price target of $310, citing the potential addition of a “third GW-scale client” – widely believed to be Microsoft – to AMD’s existing AI partnerships with OpenAI and Meta Platforms.
In addition to its AI-led growth, AMD is also diversifying into space technology, with its chips intended for use in upcoming missions led by NASA.
