Hedge funds are buying these two big tech stocks while selling two rivals
Advanced Micro Devices (AMD) is positioning itself as a formidable competitor in the artificial intelligence (AI) and data center markets, with ambitious growth targets and strategic partnerships that could reshape its future trajectory. The semiconductor company, known for its CPUs, GPUs, and other computing technologies, has outlined a comprehensive strategy to capitalize on the expanding AI market while maintaining growth across its diversified product portfolio.
AMD’s AI vision takes shape
AMD’s recent Financial Analyst Day highlighted the company’s bullish outlook on the AI market, projecting a total AI silicon total addressable market (TAM) of over $1 trillion by 2030. The company aspires to capture a double-digit market share in this expanding sector, which could translate to over $100 billion in annual data center revenue by the end of the decade.
The cornerstone of AMD’s AI strategy is its MI450 "Helios" rack, optimized for power and cooling efficiency on the Open Rack Wide platform. This solution, expected to launch in the second half of 2026, aligns with Meta’s architecture and positions AMD for significant growth in AI infrastructure. The company anticipates multiple gigawatt-scale customer AI deployments starting with this MI450 generation.
Perhaps most transformative is AMD’s partnership with OpenAI, announced in late 2025. This collaboration involves OpenAI committing to purchase 6GW of AMD equipment, potentially generating $80-100 billion in revenue through 2030. Analysts view this deal as a validation of AMD’s AI roadmap and a signal that hyperscale customers are now considering AMD as a viable alternative to NVIDIA, rather than merely a competitive check.
Diversified portfolio supports growth strategy
While AI represents AMD’s most significant growth opportunity, the company continues to maintain a diversified product portfolio across multiple market segments.
In the data center segment, AMD’s EPYC server CPUs have been gaining traction, with the company projecting market share expansion from approximately 40% to over 50% in the coming years. The Turin processors have been particularly strong performers, contributing to a 22% year-over-year increase in the Data Center segment during the third quarter of 2025.
The client segment has shown robust performance, with record CPU sales and strong average selling prices (ASPs) up 42% year-over-year as of June 2025. AMD achieved a record high desktop MPU market share of 30.2%, though this was partially offset by decreases in notebook and server shares, which fell to 17.3% and 23.7%, respectively.
The gaming segment has also contributed to AMD’s growth, benefiting from normalized console inventories and strong demand for Radeon GPUs. Meanwhile, the embedded segment, after experiencing some softness, is expected to return to growth in the latter half of 2025.
Financial outlook and long-term targets
AMD’s financial performance has been strong, with second-quarter 2025 revenue reaching $7.7 billion, up 32% year-over-year, driven primarily by CPU sales. The company’s third-quarter guidance projects revenue of $8.7 billion, representing a 28% year-over-year increase.
Looking further ahead, AMD has set ambitious long-term financial targets, including a sales compound annual growth rate (CAGR) of over 35%, gross margins of 55-58%, and operating margins exceeding 35%. The company projects earnings per share (EPS) power of $25-$30+ by 2030, reflecting confidence in its growth strategy and market positioning.
Analysts have adjusted their projections based on AMD’s recent performance and strategic initiatives. EPS estimates for 2027 have been increased to $9.06-$10.36, up from previous projections, driven largely by anticipated AI revenue growth. If the OpenAI partnership fully materializes, some analysts believe AMD’s EPS could reach $10-$11 by 2027.
Bear Case
Can AMD overcome execution risks in scaling its AI infrastructure?
AMD faces significant execution challenges as it transitions to rack-scale AI solutions. The company lacks NVIDIA’s end-to-end networking strategy and depends on external vendors for critical networking components. This dependence could create bottlenecks in AMD’s supply chain and limit its ability to deliver integrated solutions at scale.
The MI450 Helios rack represents AMD’s first major foray into complete rack-scale deployments, introducing new complexities in system integration, power management, and cooling. Any delays or technical issues could jeopardize AMD’s ability to meet customer expectations and deployment timelines, particularly for the gigawatt-scale AI deployments anticipated in late 2026.
Additionally, AMD must navigate complex logistics for global deployments while competing against NVIDIA’s established ecosystem. The company’s limited experience in managing large-scale AI infrastructure deployments compared to its competitors could impact customer confidence and slow adoption rates.
Will AMD’s market share gains be limited by NVIDIA’s ecosystem advantages?
NVIDIA has established a comprehensive AI ecosystem that extends beyond hardware to include software frameworks, development tools, and a large community of developers. This ecosystem creates significant switching costs for potential customers considering AMD’s solutions.
AMD’s AI software stack, while improving, still lags behind NVIDIA’s mature CUDA platform in terms of developer adoption and optimization. This gap could limit AMD’s appeal to customers who prioritize software compatibility and ecosystem support over hardware performance or pricing advantages.
Furthermore, NVIDIA’s first-mover advantage has allowed it to secure long-term commitments from key AI customers. Even with AMD’s OpenAI partnership, convincing other major players to diversify their AI infrastructure remains challenging, potentially capping AMD’s market share gains below its double-digit aspirations.
Bull Case
How could AMD’s partnership with OpenAI transform its competitive position?
The OpenAI partnership represents a watershed moment for AMD, potentially transforming its position in the AI accelerator market. This collaboration validates AMD’s AI technology roadmap and signals to other hyperscale customers that AMD can deliver competitive solutions for large-scale AI deployments.
The deal’s estimated $80-100 billion value through 2030 provides AMD with significant revenue visibility and the financial resources to accelerate its R&D investments. This could create a virtuous cycle where increased investment leads to more competitive products, attracting additional customers beyond OpenAI.
Moreover, working closely with OpenAI gives AMD invaluable insights into the requirements of cutting-edge AI workloads. This knowledge transfer could help AMD optimize future products specifically for large language models and other advanced AI applications, potentially leapfrogging competitors in certain performance metrics critical to AI training and inference.
What factors could drive AMD to exceed its projected market share gains?
AMD’s history of successful market share gains in the server CPU segment provides a blueprint for similar success in AI accelerators. The company has already demonstrated its ability to design competitive products and execute on an aggressive roadmap, as evidenced by its EPYC CPU line gaining significant share against Intel.
Supply constraints affecting NVIDIA could create opportunities for AMD to secure new customers seeking to diversify their AI infrastructure suppliers. As AI deployment scales globally, power availability and customer financing capabilities may become limiting factors, potentially favoring AMD’s solutions if they can deliver better performance per watt or more flexible deployment options.
Additionally, AMD’s integrated approach—leveraging strengths in both CPUs and GPUs—could provide advantages as AI workloads evolve to require tighter integration between different processing elements. The company’s expertise across multiple semiconductor categories positions it well to deliver optimized solutions for next-generation AI applications that may benefit from heterogeneous computing architectures.
SWOT Analysis
Strengths
- Strong AI roadmap with MI450 series and clear product cadence
- Strategic partnership with OpenAI validating technology approach
- Diversified product portfolio across multiple market segments
- Record high desktop market share (30.2%)
- Projected >35% sales CAGR and improving gross margins
- Successful history of gaining market share in server CPUs
Weaknesses
- Execution risks related to new rack-scale product deployments
- Dependence on external vendors for networking solutions
- Limited AI software ecosystem compared to NVIDIA
- Declining notebook and server market shares in recent quarters
- Higher operating expenses impacting near-term profitability
Opportunities
- AI silicon TAM of over $1 trillion by 2030
- Potential to achieve double-digit market share in AI accelerators
- Expansion in server CPU market share from 40% to over 50%
- Multiple gigawatt-scale customer AI deployments starting 2H26
- Growing demand for AI capabilities across various industries
- Potential for additional strategic partnerships beyond OpenAI
Threats
- Intense competition from NVIDIA’s established AI ecosystem
- Intel’s renewed focus on CPU market could pressure margins
- Power availability and customer financing challenges for global AI deployments
- Export restrictions affecting sales to China
- Potential market saturation in certain segments
- Macroeconomic uncertainties impacting customer spending
Analysts Targets
- BofA Securities (November 12th, 2025): Buy, $300
- Barclays (November 12th, 2025): Overweight, $300
- Evercore ISI (November 12th, 2025): Outperform, $283 (increased from $270)
- Barclays (November 6th, 2025): Overweight, $300
- Morgan Stanley (November 5th, 2025): Equal-weight, $260 (increased from $246)
- KeyBanc (November 5th, 2025): Sector Weight, no price target
- Morgan Stanley (November 3rd, 2025): Equal-weight, $246
- Mizuho (October 21st, 2025): Outperform, $275
- BofA Securities (October 17th, 2025): Buy, $300 (increased from $250)
- Wolfe Research (October 14th, 2025): Outperform, $300 (upgraded from Peer Perform)
- Jefferies (October 6th, 2025): Buy, $300 (upgraded from Hold, previous PT $170)
- Truist Securities (August 26th, 2025): Buy, $213 (upgraded from Hold, previous PT $173)
- Citi Research (August 13th, 2025): Neutral
- Barclays (August 7th, 2025): Overweight, $200
- Barclays (August 6th, 2025): Overweight, $200 (increased from $130)
- Stifel (August 6th, 2025): Buy, $190 (increased from $161)
- Raymond James (August 6th, 2025): Outperform, $200 (increased from $120)
- KeyBanc (August 6th, 2025): Sector Weight, no price target
- Citi Research (July 11th, 2025): Neutral
This analysis is based on information available as of November 17, 2025, incorporating analyst reports published between July and November 2025.
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