Truist is advising clients to buy the weakness in a major chip stock following its latest earnings report. Analyst William Stein believes the company's long-term earnings power outweighs short-term issues. He noted strong customer engagement and momentum in data-center and AI initiatives, which is driving the firm’s bullish thesis. The firm raised its 2027 earnings estimate.

Truist acknowledged a boost from a China-related factor but emphasized the underlying growth trajectory. The firm pointed to accelerating deployments of Instinct MI350 GPUs and strong adoption of 5th-generation Epyc CPUs. Management expects data-center revenue to increase by over 60% annually in the next 3-5 years. This positive outlook led to the raised price target of $283.

Despite acknowledging that operating expenses remain a drag, Truist highlighted management's plans for operating leverage in 2026. In Q4, the company's revenue beat expectations by roughly 6%, driven by strong performance in the Datacenter and Client segments. Investors seem to be focused on the long-term growth story despite some near-term imperfections.

This recommendation comes amid a volatile period for the semiconductor industry, with investors closely watching companies' ability to navigate macroeconomic headwinds and capitalize on the growing demand for AI and data center technologies. The company is likely AMD given the context of the article.