HSBC upgrades AMD stock to Buy on AI revenue upside potential

Investing.com - HSBC upgraded Advanced Micro Devices (NASDAQ:AMD) from Hold to Buy on Thursday, setting a price target of $200.00. The chipmaker, currently trading at $144.32 with a market capitalization of $234 billion, trades at a P/E ratio of 104, reflecting high growth expectations. According to InvestingPro data, AMD maintains a GOOD financial health score, with strong liquidity and moderate debt levels.

The upgrade represents a significant shift from HSBC’s previous stance on January 8, when it had downgraded AMD to Reduce due to concerns about a potentially weaker fiscal year 2026 AI revenue outlook and less competitive AI GPU roadmap.

HSBC now forecasts AMD’s FY26 AI revenue at $15.1 billion, which stands 57% above the consensus estimate of $9.6 billion. This revised outlook is primarily driven by a higher-than-expected pricing premium for AMD’s recently launched MI350 series.

The research firm also expressed optimism about AMD’s upcoming MI400 rack architecture, scheduled for launch in 2026, though it noted it remains too early to quantify its impact.

Despite AMD shares rallying 14% following the company’s AI day event on June 12, HSBC believes the market has not fully priced in the potential upside to FY26 AI revenue that could lead to higher re-rating of the stock.

In other recent news, Advanced Micro Devices (AMD) is set to release its fiscal second-quarter 2025 financial results on August 5, 2025. Investors are keenly anticipating the report, especially as KeyBanc Capital Markets projects AMD is on track to achieve $7 billion to $8 billion in AI revenue this year, driven by strong demand for its MI355 AI GPU. Meanwhile, Goldman Sachs has initiated coverage on AMD with a Neutral rating, citing that while the company has gained significant market share in the server CPU and PC CPU markets, its growth may slow due to increased competition from ARM-based solutions.

Additionally, Truist Securities maintains a Hold rating on AMD, highlighting ongoing debates about the company’s datacenter GPU business and customer motivations. The firm noted that some customers might be purchasing AMD’s GPUs to foster competition and check prices against Nvidia (NASDAQ:NVDA). Despite these discussions, AMD’s server demand remains robust, with notable upticks in Turin deployments. As the company prepares for its earnings announcement, industry analysts are watching closely for further developments.

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