Advanced Micro Devices (AMD -3.08%) met expectations with its first-quarter report last month, but overall growth was anemic. While data center and PC revenue surged, driven by artificial intelligence (AI) and a market comeback, tumbling revenue in the gaming and embedded segments offset those gains.

Looking further ahead, Jefferies analyst Blayne Curtis expects AMD to benefit from a strong upcycle in the semiconductor market and soaring demand for AI chips. Curtis assumed coverage of AMD on Monday with a buy rating and a price target of $190. Based on the current stock price, this price target represents an upside of 25%.

Multiple ways to grow

While rival Nvidia has benefited the most from soaring demand for AI chips, AMD is starting to catch up. The company's latest MI300 family of data center GPUs surpassed $1 billion in revenue and is now expected to bring in $4 billion in revenue this year.

AI can also drive demand in other areas. As companies invest in AI chips, they'll need other data center hardware, as well. In the data center CPU market, AMD is in a strong position. The company has staged an incredible comeback over the past few years with its EPYC family of CPUs, beating Intel in terms of performance and efficiency.

The PC market also represents an opportunity for AMD as Microsoft aggressively pushes AI for Windows. Some of AMD's PC CPUs have built-in AI accelerators, boosting the performance of AI tasks performed directly on users' devices. Competition will be stiff, though, with Intel putting AI hardware in all of its Meteor Lake laptop chips and as Qualcomm enters the fray this year.

A pricey stock

While AMD has plenty of growth opportunities, its struggles in the gaming and embedded markets are holding it back. With the stock trading for more than 40 times forward earnings today, a price target of $190 looks a bit optimistic.