It is the job of Wall Street analysts to rate stocks and set price targets for them — figures that convey the direction they believe those stocks will take over the next year or so. While these are just predictions based on earnings forecasts, many investors put faith in these price targets when considering which stocks to buy. However, in my view, one recent analyst call on a widely followed chipmaker may have been a bit overzealous.

On Tuesday, KeyBanc raised its price target on AMD (AMD 0.77%) to $725 per share. That’s after a huge 140% rally this year that has lifted the stock to around $510.

Image source: The Motley Fool.

AMD’s stock has gotten ahead of its business

Since the AI arms race began, AMD has been behind. It’s…