HSBC Upgrades AMD to 'Buy' Amid Optimism for AI Chip Dominance

HSBC has recently bolstered its confidence in AMD by upgrading its rating from "hold" to "buy," and significantly raising the price target from $100 to $200. This decision is driven by optimistic projections for AMD's advancing AI GPU product line.

HSBC analyst Frank Lee highlights the competitive edge of AMD's new MI350 series chips, which offer a substantial premium over NVIDIA's Blackwell B200 chips. Lee estimates the average selling price of the MI355 chip could reach $25,000 per unit, a notable increase from the previous forecast of $15,000.

This price uptick is anticipated to considerably boost AMD's AI business revenue by the 2026 fiscal year, prompting a market reassessment. Despite a 14% rise in stock price since AMD's AI Day event, Lee argues that the market has not yet fully accounted for this potential.

HSBC underscores the strategy of leveraging premium pricing and the MI350's plug-and-play compatibility with existing data centers to reclaim market share from NVIDIA's dominant AI GPU presence. AMD CEO, Lisa Su, reaffirmed the company's commitment to an open ecosystem during last month's AI event, pledging support for all major frameworks and offering cost-effective, streamlined AI solutions.

The forthcoming MI400 series is anticipated to be the next catalyst, with Lee projecting further AI revenue gains. HSBC asserts that AMD's bold foray into the AI chip market is still in its early stages, and Wall Street is poised to soon recognize its potential.