Citigroup Boosts AMD Target Price 20% Amid AI Product Concerns

Citigroup has raised its target price for Advanced Micro Devices (AMD) from $100 to $120, maintaining a "neutral" rating. This adjustment comes as investors closely monitor AMD's release of the MI355X and updates on the MI400. Analyst Christopher Danely highlighted that while expectations are high, there are concerns about AMD's profitability, particularly as the company acknowledges that its AI-focused products are currently impacting its profit margins.

Danely emphasized that the key question now is how AMD plans to improve its financial situation. Compared to NVIDIA, AMD has some advantages, such as the larger HBM capacity of the MI355X and the greater flexibility of its ROCm software. However, Danely believes that NVIDIA will continue to dominate the market, posing a competitive challenge for AMD.

Looking ahead, Danely expects AMD to gain momentum in the second half of 2025. He noted that the recovery of the high-margin Xilinx business could boost overall profitability, while the launch of the MI355X and MI400 could enhance AMD's influence in the critical AI sector. Despite adjusting earnings forecasts due to one-time expenses related to export controls, Danely raised the target price to reflect improved market sentiment in the industry.

Similarly, Vivek Arya, an analyst at Bank of America, observed strong sales momentum for AMD in the second quarter, driven by the launch of higher average selling price (ASP) products. Arya also noted that the second half of the year could see typical seasonal strength. Additionally, AMD's recent release of a new Ryzen Xbox gaming chip, which will be featured in Microsoft's upcoming ROG Xbox Ally handheld device, provides further support for the stock.

Ask Aime: What's ahead for AMD after Citigroup's price boost?