Goldman expects broad upward revisions in semiconductors in 2Q, with AMD highlighted as a key long setup during earnings season due to server CPUs and AI catalysts

Overview

This is Goldman’s preview of the Americas semiconductor sector during 2Q earnings season, covering multiple sub-sectors including digital semiconductors and EDA, analog semiconductors, semiconductor capital equipment and foundry, storage, and others. The overall view is that most semiconductor subsectors have upside potential for both results and guidance, but because sector shares have already risen sharply, the market’s bar for earnings realization is higher. The outlook on AMD is constructive, with the view that server CPU demand, agentic AI-related infrastructure spending, MI450 ramping in the second half, and Advancing AI activity at AMD could be price catalysts.

Core views

Core views include: first, the 2Q semiconductor earnings season still has broad fundamental upside for many segments, especially companies in compute, storage, semiconductor equipment, and analog chips with exposure to datacenters, industrials, and aerospace and defense. Second, AMD’s quarter and subsequent guidance are expected to be supported by datacenter demand, with server CPU revenue growth as the most direct driver. Third, MI450 contribution, progress in Meta/OpenAI collaborations, and new customer onboarding could increase confidence in 2027 datacenter GPU revenue. Fourth, although fundamentals are still relatively strong, semiconductor sector shares have already moved up considerably, so risk-reward needs to be reassessed in light of a much higher expectation threshold.

Analysis framework

The report uses an earnings-preview framework, breaking out company rating, price target, EPS forecast, revenue and margin assumptions, gaps versus consensus, key conference call focus points, and potential catalysts after earnings. For AMD, the analysis focuses on 2Q results, 3Q guidance, server CPU demand, datacenter GPU customers and MI450 ramping, gross margin and operating leverage, and the valuation multiple implied by the 12-month target price.

Methodology notes

• equity_researchearnings_preview

  Earnings Preview

  By comparing Goldman forecasts with market consensus expectations, the report identifies potential stock reactions from quarter results, next-quarter guidance, and conference call information.

• Valuation methodsp/e_multiple

  P/E Valuation

  AMD’s price target is based on 32x P/E multiplied by normalized EPS of $20; the multiple was raised from 30x, reflecting faster datacenter growth and higher visibility.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AMD.US

  Core coverage name; Buy rating; listed as one of the key long tactical ideas for the earnings season

  Strengths

  Strong server CPU demand, agentic AI-supported datacenter demand, MI450 ramp in the second half, and possible participation from Meta/OpenAI and new customers could lift 2027 datacenter GPU expectations.

  Weaknesses

  Weak PC trends could partially offset datacenter strength, while expectations for AI-related growth remain elevated.

  Comparison

  Goldman expects AMD’s 2027 EPS of $14.50, above the market’s 13%; 2Q and 3Q EPS forecasts are about 1% above market expectations.

  Risks

  Potentially slower-than-expected adoption of agentic AI, slower-than-expected AMD GPU deployment with Meta-related initiatives, erosion of AMD’s x86 share in enterprise AI, and insufficient operating leverage.

• SOX Semiconductor Index

  Industry backdrop and risk-return reference

  Strengths

  Many sub-directions in the semiconductor ecosystem have potential for upward revisions to earnings and valuation assumptions.

  Weaknesses

  SOX already significantly outperformed in 2Q, increasing the earnings bar before results.

  Comparison

  The report states SOX was up 88% in 2Q, while SPX was up 14% in the same period.

  Risks

  If results or guidance only slightly beat expectations, the stock reaction may be constrained by elevated expectations.

Key data

• AMD RatingBuyThe report states clearly that Goldman’s rating on AMD is Buy.
• AMD 12-month Price Target$640The price target was raised from $450 to $640.
• AMD 2027 EPS Forecast$14.50Goldman says this estimate is above the market 13%.
• AMD Normalized EPS Valuation Assumption$20The price target is based on 32x P/E times normalized EPS of $20.
• AMD 2028E EPS RevisionRaised from $18.00 to $19.40The summary table note shows the 2028E EPS estimate was raised.
• AMD EPS Forecast AdjustmentAverage upside about 7%Driven by higher server CPU revenue and stronger margins.
• Server CPU Revenue Guidance2Q year-over-year growth of 70%The report says AMD previously guided to 2Q server CPU revenue growth of 70% year over year.
• Sector Performance BackdropSOX up 88%, SPX up 14%The report says semiconductors in 2Q significantly outperformed the broad market, making pre-earnings positioning more challenging.

Impact & implications

From an investment perspective, the report supports focusing on AMD and certain semiconductors with AI, datacenter, and storage upside during earnings season. AMD’s key questions are whether server CPU demand continues to beat expectations, whether the 2H contribution from MI450 is quantified, whether deployments by customers such as Meta/OpenAI provide clearer evidence, and whether margins and expense leverage can support a higher EPS assumption. At the sector level, fundamental upside revisions do not automatically mean shares must continue rising, because the prior run-up has already raised market demands for earnings and guidance.

Risks

• Semiconductor shares have already risen significantly, increasing the threshold for realizing earnings upside.
• If AMD server CPU demand misses expectations, the datacenter growth narrative could weaken.
• If the MI450 second-half ramp and Meta/OpenAI deployments lack quantifiable progress, confidence in 2027 GPU revenue could be affected.
• Weak PC demand may offset some of the upside from datacenters.
• If gross margins, expense leverage, and operating execution fall short, the room for EPS upgrades may narrow.
• Loss of x86 share in enterprise AI is a structural downside risk for AMD.

What to watch

• Whether AMD’s 2Q results and 3Q guidance beat market expectations.
• Whether server CPU revenue continues to reflect demand pulled forward by agentic AI.
• Whether the scale of MI450 ramp in the second half is quantified by management.
• Participation from Meta, OpenAI, and other datacenter GPU customers.
• Trends in gross margins and OpEx leverage.
• Whether AMD’s Advancing AI event on July 23 provides fresh positive catalysts.
• Whether earnings revisions in semiconductor equipment, storage, and analog chips can offset high valuation and high expectations pressure.