11:08 AM EST, 11/05/2025 (MT Newswires) -- Advanced Micro Devices ( AMD ) had a good quarter as expected, but all eyes are on its analyst day next week, which should give clarity on the value proposition of the MI450 rack scale and the benefits of the ZT Systems acquisition, Morgan Stanley said in a Wednesday note.

The company's overall financial results aligned with expectations except for gaming, which performed slightly better than anticipated, Morgan Stanley analysts said.

The server market remains strong, and AMD is driving strong value growth in PCs, the analysts said. They added that the embedded segment, which includes specialized computing applications, is expected to see a cyclical recovery with the company confirming growth next year.

On the artificial intelligence front, AMD returned to year-over-year growth in Q3 after declines in H1. The company is still "lackluster" compared to its peers, with Nvidia ( NVDA ) and Broadcom's ( AVGO ) Application-Specific Integrated Circuits growing much faster, according to the note.

The analysts said they project continued share gains in notebook and server processors in 2025 and 2026 as AMD continues to execute on its product roadmap. The company's core business should accelerate significantly, driven by the return of server upgrades and ongoing growth in the PC market, while conditions in gaming and embedded markets are anticipated to normalize.

AMD's AI business, particularly with new MI400 products, should gain momentum in 2026, but maintaining leadership in performance is critical for its success in the segment, the note said.

Morgan Stanley maintained the company's stock rating at equal-weight and raised the price target to $260 from $246.

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