HSBC has upgraded the shares of microprocessor maker AMD and now advises to buy them. Analysts believe that the securities of the chipmaker will be revalued due to the revenue from AI processors sold at a markup compared to their counterparts from Nvidia. The bank also raised the target price of AMD securities by 100% at once. HSBC's optimism contrasts with Goldman Sachs' restraint: its fresh share price target was below its current price.

Details

"Advanced Micro Devices is back in the AI game," HSBC analyst Frank Lee wrote July 10 in a note that quoted CNBC. Lee upgraded the chip maker's stock from Hold (advice to hold) to Buy and doubled the target price from $100 to $200. This implies a 44.5% increase in the value of the securities from the closing price on July 9.

HSBC cited AMD's new AI chips as a key factor for the upgrade. The MI350 series of AI processors show notable markup and performance improvements that could rival Nvidia's Blackwell line Blackwell: this will impact AMD's revenue, Lee expects.

"With performance comparable to the Nvidia B200, we now believe the MI355's average selling price could be as high as $25k (previously estimated at $15k)," quotes a Seeking Alpha analyst note. - We expect AI revenue growth in fiscal 2026 to cause a revaluation of AMD stock, which is not yet fully reflected in the price despite a 14% increase following the company's presentation."

HSBC also expects AMD's quotations to rise further when the MI400 series of AI chips are unveiled.

"Our updated AI revenue forecast for 2026 is $15.1 billion, 57% above the consensus estimate of $9.6 billion," the HSBC analyst wrote.

Why Goldman Sachs doesn't expect AMD stock to rise

Goldman Sachs initiated analyst coverage of AMD stock on July 10 with a neutral rating and a $140 target price: this is up 1.2% from the closing price on July 9 reported by investing.com. Goldman's target was below the current price: in trading on July 10, the securities were up 5.3% to $145.82 at the moment.

The bank's analysts noted that the company is successfully implementing its strategy and has significantly strengthened its share in the x86 server and consumer processor markets. This is supported by a 21.71% increase in revenue over the past 12 months to $27.75 billion, Goldman Sachs noted Goldman Sachs.

But at the same time, the investment bank expects AMD's share growth in the server segment to slow down, as the market is strengthening the position of ARM-based solutions, despite the overall positive trend for the entire market. The investment bank's report also emphasizes that AMD's AI chips are unlikely to win back a significant share from Nvidia, given its strong position, strengthened by advantages in software, as well as competition from custom chips (ASICs), which are increasingly gaining a share in the capital expenditures of large customers.

Goldman also warned that AMD will remain in an "investment phase", actively developing its AI chip business, which could lead to more modest earnings growth than investors expect.

This article was AI-translated and verified by a human editor

Share