AMD Fair Value Estimate Rises to $140 as US Reverses Ban on Sales to China

AMD's fair value estimate is raised to $140 per share from $120 due to the reversal of the ban on selling its MI308X graphics processors into China for AI workloads. This allows AMD to compete with Nvidia in the Chinese market and raises the firm's revenue estimates by $1.2 billion in 2025 and $2.8 billion in 2029. The US reversal may signal a change in overall AI policy toward China.

Advanced Micro Devices (AMD) has seen its fair value estimate increase to $140 per share, up from $120, following the reversal of a ban on the sale of its MI308X graphics processors into China for artificial intelligence workloads. This development, announced on July 15, 2025, opens up new opportunities for AMD to compete in the Chinese market, traditionally dominated by Nvidia.

The ban, which was implemented 90 days ago, caused AMD to incur an $800 million writeoff. The reversal of this ban allows AMD to tap into a significant market for AI applications, which was previously restricted. While the MI308X is not AMD's most advanced product, it still presents a viable option for AI workloads in China, particularly in areas where Nvidia's H20 products are not as effective.

Morningstar Equity Research, which originally published this analysis, noted that the reversal is a positive development for both AMD and Nvidia. However, they remain cautious about the long-term implications of the policy shift. The firm maintains its Very High Uncertainty Rating for AMD, reflecting the ongoing geopolitical tensions and potential for future restrictions.

The reversal is expected to add $1.2 billion in revenue for AMD in 2025 and $2.8 billion in 2029. These estimates reflect the reinsertion of previously lost sales due to the ban. Additionally, the reversal may boost AMD's near-term gross margin estimates as much of the prior writeoff is anticipated to be reversed.

The long-term impact of this policy shift is uncertain. While it could signal a change in AI policy towards China, it may also mean that Chinese firms remain dependent on U.S. hardware and software. Nvidia, with its H20 products, is likely to be the primary beneficiary of this reversal, given its strategic advantages and dominance in the AI ecosystem.

In summary, the reversal of the ban on AMD's MI308X sales into China is a positive development for the company, opening up new revenue streams and opportunities to compete in the lucrative AI market. However, investors should remain cautious due to the ongoing uncertainties and the potential for future policy shifts.

References:

[1] https://global.morningstar.com/en-ca/stocks/amd-raising-fair-value-estimate-ban-firms-sales-into-china-will-be-reversed
[2] https://www.morningstar.com/stocks/amd-raising-fair-value-estimate-ban-firms-sales-into-china-will-be-reversed
[3] https://www.hpcwire.com/2025/07/15/nvidia-cleared-to-resume-h20-ai-chip-exports-to-china-amid-bipartisan-criticism/
[4] https://www.ainvest.com/news/nvidia-h20-chip-approval-catalyst-dominance-china-ai-infrastructure-boom-2507/