"The Main Beneficiary of Next-Generation CPUs": Citi Predicts 25% Growth for AMD Thanks to Meta

The rapid rise of Meta’s AI agent, Muse, could drive a 25 percent increase in shares of chipmaker AMD, according to Citi analyst Atif Malik. Barron’s reports his opinion. This is due to Meta’s heavy reliance on central processing units from the U.S. chipmaker, Malik asserts. He also expects positive momentum from Intel.

Citi raised its price target for AMD shares from $575 to $800, while maintaining its “buy” rating. The new price target implies a 27% increase from Monday’s, October 5, closing price.

Malik believes AMD’s stock will rise because he expects Muse and other AI agents to become powerful drivers of demand for central processing units (CPUs). Unlike traditional chatbots, which remain idle between interactions with users, these agents operate continuously, so they require significantly more computing power, memory, and network resources to function, according to Barron’s.

“Following the release of Meta Muse and the subsequent revision of our forecasts for the total addressable market for central processing units, we are raising our estimates for AMD, as we are convinced that the company will be the primary beneficiary of the next-generation CPUs and that Meta is one of AMD’s largest customers in its server business,” Yahoo Finance quotes Malik as saying.

He expects the processor market to grow by an average of 60% per year through the end of the decade and reach a volume of $300 billion. “We still expect AMD to be the primary beneficiary of the processor renaissance, with Intel as a secondary beneficiary,” he added.

AMD shares rose 3.8% during trading on October 6. Since the beginning of the year, the stock price has more than tripled: in September, the company’s market capitalization exceeded $1 trillion for the first time amid the rapid rise in Muse’s popularity.

“As new agents are created and developed, and as their popularity among users grows for performing a wide range of tasks, the workload will begin to shift from GPUs (graphics processing units manufactured by Nvidia. — Oninvest) to the CPU,” said Ryan Schraut, president of Signal65, an AI hardware consulting firm. His comments were reported by CNBC.

"There's a CPU renaissance underway," Yahoo Finance quotes Evercore ISI analyst Mark Lipachis as saying.

Investors are watching to see how Meta plans to keep Muse running for users now that downloads have exceeded 5 million since its launch in September, according to data from Sensor Tower. Morgan Stanley estimates that the cost of operating Muse ranges from $3 to $130 per user per month, with an average of $37, CNBC reports. According to the bank, Meta’s AI agent could account for 20% of AMD’s total chip sales in 2026.

At the same time, AMD has a strong foothold among hyperscalers—the largest cloud service providers—where most of the virtual machines for agents will be deployed. Another advantage for the company is its use of x86 architecture, which allows agents to run legacy software without compatibility issues, notes CNBC.

“AMD may benefit the most from this, as it has the largest market share among cloud hyperscalers in the CPU segment,” said Mizuho analyst Jordan Klein, adding that he “wouldn’t count Nvidia out.” “If you’re a company that can supply both types of chips, you’re in the best position,” the expert emphasized.

AMD is ramping up chip production to meet a surge in demand. The company’s revenue in the data center segment more than doubled to $6.7 billion for the quarter ending in June, accounting for nearly 60% of total sales. In the second half of 2026, AMD forecasts an 80% year-over-year increase in revenue from server processors, and a 70% increase in 2027.

As CEO Lisa Su told reporters in Taiwan on Tuesday, the company will “significantly increase” chip shipments in 2027. Revenue from data centers is expected to more than double by the end of 2027, while revenue from sales of graphics processing units (GPUs) for artificial intelligence applications will jump by more than 100%, according to Yahoo Finance. Futurum estimates that total CPU (central processing unit) sales will reach $118 billion in 2027, nearly double the company’s May forecast, CNBC reports.

In July, AMD projected that by 2030, sales across the entire central processing unit market would reach $220 billion, compared to its previous forecast of $60 billion for 2025, the TV channel reports. At that time, the company also stated that it expects to capture more than half of that market.

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