Things are finally looking up for Advanced Micro Devices (NASDAQ:AMD) in the AI game. While AMD was initially seen as a genuine contender at the onset of the AI boom, sentiment quickly turned bearish as many Street watchers concluded that the company wouldn’t be able to mount a serious challenge to Nvidia’s dominance in the space.
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A prime example is HSBC’s Frank Lee, who back in January downgraded his rating on AMD to Reduce. At the time, Lee cited concerns over the company’s “weaker FY26e AI revenue outlook,” arguing that AMD’s AI GPU roadmap seemed less competitive compared to peers.
However, Lee’s stance has shifted dramatically over the past few months. After first upgrading AMD to Hold, he’s now gone all-in on the bullish case, bumping his rating up to Buy and doubling his price target to $200 (from $100). In fact, with this latest upgrade, Lees now shares the Street’s most bullish outlook for the chipmaker as his new join-high target factors in a 12-month gain of ~39%. (To watch Lee’s track record, click here)
The catalyst for Lee’s newfound enthusiasm lies in AMD’s recent launch of the MI350 series. The performance improvements demonstrated by these chips, especially in comparison to Nvidia’s latest-generation HGX B200 AI GPU, caught Lee by surprise. As a result, he now expects a much higher pricing premium than previously forecast (with an ASP for the MI355 of $25,000 vs. his prior $15,000 estimate), a development that could boost AMD’s earnings through 2025 and 2026. Lee’s updated forecast calls for FY26e AI revenue of $15.1 billion, sitting 57% above the current consensus estimate of $9.6 billion.
These tailwinds could become evident sooner rather than later. Lee believes the “pricing surprise” from the MI350 series may begin to show up as early as the second half of this year. With AMD’s FY25 product mix expected to be dominated by the MI350, the analyst is forecasting a meaningful ramp-up in the back half of 2025. While management recently flagged a revenue shortfall of $1.5 billion due to export curbs (split between $700 million in Q2 and $800 million in Q3), Lee contends that the stronger pricing and improved product mix from the MI350 line will more than compensate. Accordingly, he has raised his 2025 AI GPU revenue forecast to $8.5 billion – 34% above Street expectations.
Looking further ahead, Lee sees even greater potential on the horizon. The anticipated launch of the MI400 series in 2026 – AMD’s first full-scale rack architecture designed to go head-to-head with Nvidia’s latest Vera Rubin platform – could provide another round of upside, thanks to expected performance upgrades and robust pricing power. “Hence,” Lee says, “we now expect that upside to FY26e AI revenue will lead to higher re-rating to AMD that is not fully priced in by the market…”
That’s the new AMD bull case in a nutshell. But what about the broader consensus? As it stands, with 25 Buys and 10 Holds, the analyst community rates AMD a Moderate Buy. However, the average price target of $134.03 suggests shares could actually fall by 7% in the coming months. Given the discrepancy, watch out for other price target hikes or rating downgrades to follow. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.