AMD Named Top Semiconductor Pick by Rosenblatt on Data Center Strength

Rosenblatt Securities named Advanced Micro Devices (AMD) its top semiconductor pick, arguing that strengthening data-center fundamentals are being overlooked amid a recent sell-off in the sector. The firm believes the industry is facing manageable supply issues rather than weakening demand, positioning capacity leaders for future growth.

Data-Center Fundamentals Improve Despite Sell-Off

According to a note from Rosenblatt, semiconductor stocks with significant data-center revenue have seen their share prices fall by an average of approximately 25% over the past month. Despite this market weakness, the firm sees underlying fundamentals continuing to strengthen.

Rosenblatt pointed to several pieces of supporting evidence for its optimistic view on data centers. These include strong earnings reports from Penguin Solutions, Micron, TSMC, and Texas Instruments, as well as a positive preannouncement from Supermicro.

Why AMD Leads the Pack

The firm's preference for AMD is based on several specific growth catalysts that position the company to capitalize on robust server demand. Rosenblatt highlighted that the primary concern for data-center growth in 2027 and beyond is supply-chain capacity, not a lack of demand.

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Key drivers for AMD, according to the firm, include:

• Next-generation technology: TSMC is expected to double its 2nm capacity in 2027, which will support the ramp-up of AMD’s Venice server CPU family.
• Product performance: Rosenblatt views Venice as the market’s highest-performing server CPU, featuring 16 memory channels versus 12 in the previous generation.
• Expanding market: AMD CEO Lisa Su recently raised the company's forecast for the 2030 server CPU total addressable market (TAM) to $220 billion from a prior estimate of $120 billion.
• AI-driven demand: Emerging personal AI agents, such as Meta’s Muse, are expected to fuel further demand for server CPUs and memory capacity.

Supply Constraints Seen as 'Tactical'

While some industry players have flagged supply-side issues—with Lam Research citing near-term constraints and Texas Instruments highlighting extended lead times for back-end equipment—Rosenblatt characterizes these as manageable. The firm views them as "tactical challenges that the industry can address" rather than indicators of severe product shortages or a downturn in demand.

This perspective reinforces Rosenblatt's thesis of favoring companies that are well-positioned to expand their production capacity. The firm believes these companies will be the primary beneficiaries of the sustained demand from the data-center market.