2 AI Stocks to Buy Now and Hold Long Term

TLDR

• Wells Fargo analyst Aaron Rakers set a $345 price target on AMD stock, representing 49% upside from current levels
• AMD shares currently trade at $231.83, with multiple analysts raising targets including UBS to $300 and Piper Sandler to $280
• AMD’s data center revenue hit a record $4.3 billion in Q3, with the segment expected to grow over 60% annually for the next five years
• Microsoft spent $69 billion in capital expenditures last year to develop AI infrastructure, with Azure revenue growing 40% year over year
• AMD stock gained 96% last year, outperforming Nvidia’s 40% gain and the broader market’s 17% return

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Wells Fargo analyst Aaron Rakers recently set a $345 price target on Advanced Micro Devices, representing roughly 49% upside from current trading levels. The five-star analyst maintained his Overweight rating on the chipmaker as AMD continues to expand its presence in the artificial intelligence market.

AMD shares currently trade at $231.83. The Wells Fargo target isn’t alone in showing confidence in the company’s future.

Advanced Micro Devices, Inc., AMD

UBS analyst Timothy Arcuri raised his price target to $300 from $265 with a Buy rating. Piper Sandler’s Harsh Kumar increased his target to $280 from $240, citing stronger visibility in data center and AI trajectory.

KeyBanc analyst John Vinh set a $270 target after upgrading to Overweight. Morgan Stanley raised its target to $260 from $246 with an Equalweight rating.

AMD’s stock performance has backed up the analyst optimism. The company’s shares gained 96% last year, beating Nvidia’s 40% gain and the broader market’s 17% return.

The chipmaker posted strong financial results in recent quarters. Data center revenue reached a record $4.3 billion in the third quarter.

Data Center Business Drives Growth

AMD expects its data center business to grow revenue at a rate of over 60% annually for the next five years. The company’s overall revenue has grown at an annualized rate of over 20% over the last two years.

Wall Street analysts expect AMD to report $34 billion in revenue for 2025. Management projects annual revenue growth of 35% on a compound annual basis over the next three to five years.

The company’s client segment also showed strength. Revenue hit a record $2.8 billion in Q3, up 46% year over year as Ryzen processors gain market share against Intel.

AMD’s gaming business pulled in $1.3 billion of revenue last quarter. This nearly tripled compared to the year-ago quarter.

The company offers a diversified portfolio of chip solutions. This includes central processing units, graphics processing units, and adaptive computing chips like field-programmable gate arrays.

Microsoft Invests Heavily in AI Infrastructure

Microsoft spent $69 billion in capital expenditures over the last year to develop AI infrastructure. The company funded these investments internally from its $147 billion in trailing cash from operations.

Microsoft Cloud revenue grew 26% year over year in its most recent quarter. The segment reached $46 billion in revenue.

Azure revenue grew 40% year over year last quarter. This growth rate is high for a company that generated $75 billion in revenue for fiscal 2025.

Microsoft 365 has over 400 million paid subscribers. The company’s Copilot AI assistant has more than 100 million monthly active users.

Operating profit grew 24% year over year last quarter. This exceeded the company’s 18% top-line growth rate.

Analysts expect Microsoft’s earnings to grow at a rate of 13% per year. Analysts expect AMD’s earnings to grow at an annualized rate of 45% in the coming years.

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