Source: Davit Kirakosyan
HSBC Upgrades AMD to Buy Amidst Rising Optimism
HSBC has upgraded its rating for Advanced Micro Devices (NASDAQ:AMD) from Hold to Buy, setting a new price target of $200. This move comes as optimism continues to build around the company’s product roadmap for artificial intelligence (AI) and its potential for generating substantial revenue. Following this news, AMD’s shares rose by over 4%.
Significant Upside in AMD’s AI Revenue
HSBC believes there is a significant upside in AMD’s projected revenue for fiscal year 2026 (FY2026) from AI, driven by stronger-than-expected pricing for its newly launched MI350 series chips. The semiconductor company, well-known for its processors and graphics cards, has been making strategic moves into the AI sector, and the MI350 series chips are a key part of that strategy.
Back in January, HSBC had expressed concerns over AMD’s competitiveness in the AI GPU space. However, recent developments have reversed that viewpoint. The bank’s latest forecast anticipates that AMD will generate $15.1 billion in AI revenue for FY2026. This figure is about 57% above the current market consensus of $9.6 billion. This sharp revision is based on the premise that AMD will command a higher pricing premium than initially expected, leveraging its technological advancements and market position.
Boosting Confidence: MI400 Rack Architecture
Another factor contributing to HSBC’s bullish stance is the forthcoming MI400 rack architecture, which is set to debut in 2026. Although it is still early to accurately model the financial impact of this product, HSBC believes that the long-term potential could further bolster AMD’s AI positioning. The MI400 series represents AMD’s continued commitment to innovation and technological advancement, which may further strengthen its foothold in the AI market.
AMD Shares Rally Amid AI Day Excitement
In the wake of AMD’s AI Day in June, the company’s shares rallied by 14%. This event provided a platform for AMD to showcase its latest AI innovations and roadmap, stirring investor excitement. However, HSBC argues that the market has yet to fully price in the coming wave of AI-driven growth. The firm expects this momentum to drive a broader re-rating for the stock, suggesting significant room for upside from current levels.
Implications for the Broader AI Market
HSBC’s upgrade of AMD not only speaks volumes about the company’s prospects but also underscores the increasing importance of AI in the tech industry. As companies like AMD continue to innovate and launch new products, the potential for AI-driven growth becomes more evident. This trend is likely to impact the broader market, influencing other tech companies to prioritize AI in their product development strategies.
Conclusion
In conclusion, HSBC’s upgrade of AMD to Buy reflects growing confidence in the company’s AI product roadmap and revenue potential. This, coupled with the strong performance of AMD’s shares following its AI Day, suggests a bright future for the company. With new product launches on the horizon and a potential surge in AI revenue, AMD is well-positioned to capitalize on the growing AI market.